Question

Multiple Choice Question Which of the following is the correct statement about variable costs? The variable cost per unit will increase when volume increases. The variable cost per unit will decrease when volume increases. The variable cost per unit does not change when volume changes.

Answer 1

Answer:

The correct answer is letter "C": The variable cost per unit does not change when volume changes.

Explanation:

Variable costs are those that change according to the level of production. Typical examples of variable costs are labor hand costs and raw material costs. Though, it is important to differ the variable cost per unit from the total variable cost.

When the volume increases, the variable cost per unit remains the same but the total variable cost increases or decreases depending on the change.

Answer 2

The correct answer is The variable cost per unit does not change when volume changes.

The following information should be considered:  

• Variable costs are those that change as per the level of production.
• Examples - raw material costs.
• At the time When the volume increases, the variable cost per unit remains the same however the total variable cost increases or decreases depending on the change.

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