Question

An example of a cost that is likely to have a variable behavior pattern is: A)...

An example of a cost that is likely to have a variable behavior pattern is:

A) sales force salaries.

B) straight-line depreciation of production equipment.

C) salaries of production supervisors.

D) direct labor costs.

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Answer #1

The answer would be option D. Direct labor costs.

Sales force salaries and salaries of production supervisors will be fixed as they will have to be given no matter the amount of sales or production that takes place.

SImilarly straight line deprecitaion will also be a fixed amount that is reduced yearly.

But direct labor cost would vary according to the hours being worked by the employees. If they are working more hours they will have to be paid more and vice versa for lower hours. So it can be said as having a variable behaviour pattern.

Hope this answers the question. If you liked the answer please give an up-vote. It will be highly encouraging for me. Thank You.

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