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Which of the following is a variable cost?

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Question: Which of the following is a variable cost?

Options:

  1. Rent of factory building
  2. Salaries of permanent staff
  3. Direct materials used in production
  4. Depreciation on machinery

Correct Answer: Direct materials used in production

Solution: 

Direct materials vary with the level of production, making them a variable cost.

Which of the following is a variable cost?

Practice Questions

Q1
Which of the following is a variable cost?
  1. Rent of factory building
  2. Salaries of permanent staff
  3. Direct materials used in production
  4. Depreciation on machinery

Questions & Step-by-Step Solutions

Which of the following is a variable cost?
  • Step 1: Understand what a variable cost is. A variable cost changes based on how much you produce.
  • Step 2: Identify direct materials. Direct materials are the raw materials used to make a product.
  • Step 3: Recognize that if you produce more products, you need more direct materials.
  • Step 4: Conclude that since direct materials increase with production, they are a variable cost.
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