Q140
Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?
A.
Cost of raw material
AnswerB.
Cost of equipment
C.
Interest payment on past borrowing
D.
Payment of rent on buildings
Answer: Option A
Solution
Answer: Option A
Solution:
Total costs in the short-term are classified into fixed costs and variable costs. Cost of raw material is a variable cost. Variable costs vary based on the amount of output, while fixed costs are the same regardless of production output.