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Question : Which total cost is highlighted in the given statement?
Statement: It varies directly with output like payment for raw material, wages and power.

Option 1: Fixed cost

Option 2: Variable cost

Option 3: Semi variable cost

Option 4: None of the above


 


Team Careers360 1st Jan, 2024
Answer (1)
Team Careers360 13th Jan, 2024

Correct Answer: Variable cost


Solution : Total cost includes three types of cost fixed costs,variable costs and semi variable costs. Fixed cost does not varies directly with level of output like rent or insurance. Variable cost varies directly with output like payment for raw material,wages,power,etc. Semi variable cost varies with output level but not indirect proportion like salary plus commission on sales.

Hence, option B is correct.

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