Question

Which of the following statements regarding variable cost is true?

Multiple Choice

• Variable cost remains constant on a per unit basis as the number of units produced increases.

• Variable cost remains the same in total as production increases.

• Variable cost decreases on a per unit basis as the number of units produced increases.

• Variable cost increases on a per unit basis as the number of units produced increases.

Answer 1

Answer: Option 1)Variable cost remains constant on a per unit basis as the number of units produced increases.

Explanation:

Variable costs, as the name suggest is variable in response to production. The variable cost of production is a constant amount per unit of production. When  the volume of output increases the variable costs will also increase. Total variable cost is variable cost per unit multiplied by no.of units products.

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