ECONOMICS

COST ACCOUNTING

VARIABLE COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which two of the following are variable costs
A
Raw materials
B
Rent
C
Insurance
D
Water
E
Advertising
Explanation: 

Detailed explanation-1: -The total variable cost will vary (increase or decrease) proportionally with the quantity manufactured or used. Typical variable costs are materials, direct labour, water and electricity, etc.

Detailed explanation-2: -Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs.

Detailed explanation-3: -Some of the most common types of variable costs include labor, utility expenses, commissions, and raw materials. Fixed costs, on the other hand, are any expenses that remain the same no matter how much a company produces.

Detailed explanation-4: -Wages are variable costs in a firm, as the number of employees required will vary based on the demand for production, therefore the wages paid to the total number of employees will vary with the number of employees.

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