ECONOMICS

Detailed explanation-1: -The variable cost of production is a constant amount per unit produced. As the volume of production and output increases, variable costs will also increase. Conversely, when fewer products are produced, the variable costs associated with production will consequently decrease.

Detailed explanation-2: -Variable costs change in proportion to the quantity of output. As production quantity increases, the cost increases; as production quantity decreases, so do the costs. Most accounting textbooks depict variable costs as varying directly with volume.

Detailed explanation-3: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees. In some accounting statements, the Variable costs of production are called the “Cost of Goods Sold.”

Detailed explanation-4: -Answer and Explanation: b. Variable cost remains constant on a per-unit basis as the number of units produced increases.

Detailed explanation-5: -Average variable cost – A firm’s total variable cost divided by output (the quantity of product produced). Variable cost – A cost that in total increases when the firm increases its output and decreases when the firm reduces its output.