ECONOMICS
ECONOMIC DEVELOPMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
a mortgage on a building
|
|
|
employee wages on a day to day basis
|
|
|
supplies purchased from assorted locations
|
|
|
electricity to run the machinery
|
Detailed explanation-1: -Common examples of variable costs include costs of goods sold (COGS), raw materials and inputs to production, packaging, wages, and commissions, and certain utilities (for example, electricity or gas that increases with production capacity).
Detailed explanation-2: -Variable costs are any expenses that change based on how much a company produces and sells. This means that variable costs increase as production rises and decrease as production falls. Some of the most common types of variable costs include labor, utility expenses, commissions, and raw materials.
Detailed explanation-3: -Wages paid to the factory labour are costs that are directly proportional to the level of production. If zero output is being produced then these costs do not have to be incurred. These costs vary with the level of output produced. Therefore, they are classified as variable costs.
Detailed explanation-4: -Variable cost is a production expense that increases or decreases depending on changes in a company’s manufacturing activity. For example, the raw materials used as components of a product are variable costs because this type of expense typically fluctuates based on the number of units produced.