Question

Each PC produced by HP involves a cost of computer chips, wires, plastic, packaging, and other inputs. Although these costs tend to be the same for each unit produced, they are called ________ costs because the total changes based on the number of units produced. A) fixed B) variable C) target D) capital E) payroll

Answer 1

The correct answer is (b) variable cost. An expense for the company that varies according on how much is produced or sold is called a variable cost.

What is variable cost?

Depending on a company's production or sales volume, variable costs grow or fall. They climb as production rises and reduce as production declines.

A manufacturing company's raw material and packaging costs, or a retail business' credit card transaction fees or shipping costs, which increase or decrease with sales, are examples of variable costs.

A fixed cost and a variable cost can be compared.

Any business's overall expenses are made up of both variable and fixed costs. Sales or production output determine variable costs. Per unit produced, the variable cost of production is a fixed sum.

Variable costs will rise as output and production volume do as well. On the other hand, the variable costs related to production will therefore go down if fewer products are created.

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