ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: The correct answer is variable cost.

Detailed explanation-2: -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.

Detailed explanation-3: -Labor is a semi-variable cost. Semi-variable costs have elements of variable costs and fixed costs. Variable costs vary with increases or decreases in production. Fixed costs remain the same, whether production increases or decreases.

Detailed explanation-4: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.

Detailed explanation-5: -Direct labor costs are always variable costs, as they will rise and fall with production costs. Direct labor costs are the expenses incurred by paying the wages of your direct labor employees.