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    Question

    The cost element that remains constant per unit but

    varies in total with the level of production is a:
    A Fixed cost Correct Answer Incorrect Answer
    B Variable cost Correct Answer Incorrect Answer
    C Semi-variable cost Correct Answer Incorrect Answer
    D Step cost Correct Answer Incorrect Answer
    E Marginal cost Correct Answer Incorrect Answer

    Solution

    By definition, a variable cost remains constant per unit of output. However, the total variable cost increases or decreases directly in proportion to the level of production. Fixed costs (A) remain fixed in total over a relevant range of activity.

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