Multiple Choice QuestionJack works on the production line at an assembly plant. Jack receives a base salary plus $1.25 per unit assembled. This is an example of a ______ cost.Multiple choice question.variablefixedstep-wisemixed
Question
Multiple Choice QuestionJack works on the production line at an assembly plant. Jack receives a base salary plus $1.25 per unit assembled. This is an example of a ______ cost.Multiple choice question.variablefixedstep-wisemixed
Solution
The correct answer is "variable". This is because Jack's total salary changes (or varies) based on the number of units he assembles. If he assembles more units, he earns more, and if he assembles fewer units, he earns less. This is the definition of a variable cost - it changes in direct proportion to the volume of output.
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