Which of the following cost categories are considered to be

Which of the following cost categories are considered to be variable costs rather than fixed costs(two correct answers) : A) diret labor B) equipment C) insurance D) maintenance E) work material F) research and development

Solution

Following cost categories are considered to be variable costs rather than fixed costs

A) direct labor

E) work material

Variable cost is determined per activity measure. Direct labor cost depends on number of labors employed and work material depends on production target. Hence both constitute variable cost heads.