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30 December, 20:32

Which of the following is an example of a variable cost?

A.

Rent for a warehouse

B.

Paychecks for salaried employees

C.

Materials for making a product

D.

Monthly payments on a loan

answer would be C

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Answers (1)
  1. 30 December, 20:59
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    C) Materials for making a product.

    Variable costs are costs that go up and down based on a variety of factors. Rent for a warehouse will be the same every month for the duration of the lease, and won't change based on production or anything else.

    Salaried employees are paid a fixed amount regardless of their hours each week (unlike hourly/non-exempt employees) so this would not change either.

    Finally, the payments on a loan are generally the same from month to month.

    Materials used in making a product are a variable cost because if you make more of the product, your cost for materials goes up. If you make less of it, the cost goes down.
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