Question

Briefly explain what is meant by the term "variable costs" and provide three examples of same.

Answer 1

Ans.	Variable costs :   A cost that varies with the level of production or sales, known as variable cost.
	Total variable cost increases in the proportion of sales. In other words total variable
	cost increases if activity increase and decreases if activity decrease.
	Variable cost per unit remain constant on each level of activity.
	Total variable cost = Units sold * Variable cost per unit
	Examples :
	1 ) Direct materials
	2 ) Direct labor
	3) Sales commissions