Which of the Following Statements Is True of Variable Costs

question 9

Multiple Choice

Which of the following statements is true of variable costs incurred by firms?

• A)These costs are independent of the number of goods produced by firms.
• B)The rent and interest paid by firms are examples of variable costs.
• C)These costs are the difference between what firms charge for their products and the fixed costs of the products.
• D)These costs change directly with the units produced.
• E)These costs are the total amount of margin made by a firm.

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Definitions:

Process Change

Alteration or modification in the way a business operates, which could be due to technological advancements, compliance requirements, or operational improvement.

Desired Profit

The target earnings a company sets to achieve within a specific period through its operational activities.

Variable Cost Concept

Expenses that change in proportion to the amount of production or service operations.

Differential Analysis

A decision-making process that examines the differences in cost and revenue between different business alternatives to determine the most profitable option.