Variable costs are costs that remain constant in total dollar amount as the level of activity changes.

Variable Costs

Expenses that change in proportion to the activity of a business, such as raw materials and direct labor costs.

Total Dollar Amount

The complete sum of money involved in a transaction, including all costs and taxes.

Level of Activity

A measure used in accounting and production to determine the extent to which a business operation is being utilized, often influencing cost behavior.

Determine and describe the characteristics of variable, fixed, and mixed expenses.
Discern between costs fluctuating per unit and those shifting in total based on activity magnitude.

Verified Answer

Final Answer :

False

Explanation :

Variable costs are costs that change in total dollar amount as the level of activity changes.

Learning Objectives

Determine and describe the characteristics of variable, fixed, and mixed expenses.
Discern between costs fluctuating per unit and those shifting in total based on activity magnitude.