Which One of the Following Costs Is Most Likely a Variable

question 378

Multiple Choice

Which one of the following costs is most likely a variable cost?

• A) Rent paid on an office building.
• B) Cost of an equipment lease.
• C) Cost of cotton used to produce a shirt.
• D) Cost of a computer to process payroll checks.
• E) Salary paid to the chief financial officer.

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Definitions:

Fixed Costs

Unchanging expenses related to rent, salaries, and insurance that do not vary with the volume of goods produced or sold.

Transfer Price

The rate at which merchandise or services are transacted between branches within the same organization or among linked companies.

Transmission Division

A specialized segment within a company that focuses on the development, production, and distribution of transmission systems for vehicles.

Customer Service Department

The division of a company focused on addressing customer inquiries, complaints, and service requests.