Q1RQ - Horngren'S Financial And Managerial Accounting

Question

What is a variable cost? Give an example.

Step-by-Step Solution

Answer

Variable costs are the costs that show consistency on per unit basis.

 

Meaning of variable cost

The cost that is function of other variable is known as a variable cost. It remains same on per unit basis but keeps on changing in total amount with the change in level of sales.

:Examples of variable cost

1. Material cost per unit
2. Labor cost per hour
3. Selling and administration cost per unit.