{"id":204003,"date":"2025-03-21T08:28:03","date_gmt":"2025-03-21T08:28:03","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=204003"},"modified":"2025-03-21T08:28:05","modified_gmt":"2025-03-21T08:28:05","slug":"a-variable-cost-is-a-cost-that-varies-per-unit-of-product-whereas-a-fixed-cost-is-constant-per-unit-of-product","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/21\/a-variable-cost-is-a-cost-that-varies-per-unit-of-product-whereas-a-fixed-cost-is-constant-per-unit-of-product\/","title":{"rendered":"A variable cost is a cost that varies per unit of product, whereas a fixed cost is constant per unit of product"},"content":{"rendered":"\n<p>A variable cost is a cost that varies per unit of product, whereas a fixed cost is constant per unit of product. Do you agree? Explain.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>No, I do not agree with the statement. The definition given for variable and fixed costs is incorrect.<\/p>\n\n\n\n<p>A <strong>variable cost<\/strong> is a cost that changes in total with the level of production or sales volume. It varies in direct proportion to the number of units produced or sold. However, the cost <strong>per unit<\/strong> of a variable cost typically remains constant. Examples of variable costs include raw materials, direct labor (if paid per unit), and sales commissions.<\/p>\n\n\n\n<p>A <strong>fixed cost<\/strong>, on the other hand, is a cost that remains constant <strong>in total<\/strong> regardless of changes in production volume within a relevant range. However, the cost <strong>per unit<\/strong> of a fixed cost decreases as production increases and increases as production decreases. Examples of fixed costs include rent, salaries of permanent employees, and insurance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation<\/h3>\n\n\n\n<p>The key mistake in the statement is the definition of how these costs behave <strong>per unit<\/strong>.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Variable Costs<\/strong>: These costs change in total with production but stay the same per unit. For example, if raw materials cost $5 per unit, the total cost increases with more production (e.g., 100 units cost $500, 200 units cost $1,000). However, the cost per unit remains at $5.<\/li>\n\n\n\n<li><strong>Fixed Costs<\/strong>: These costs remain the same in total but change <strong>per unit<\/strong>. For example, if rent is $10,000 per month, it remains $10,000 whether the company produces 1,000 or 2,000 units. However, the cost per unit decreases as more units are produced. If 1,000 units are made, the rent per unit is $10 ($10,000 \u00f7 1,000). If 2,000 units are made, the rent per unit drops to $5 ($10,000 \u00f7 2,000).<\/li>\n<\/ol>\n\n\n\n<p>Thus, the correct explanation is that variable costs remain <strong>constant per unit but vary in total<\/strong>, while fixed costs remain <strong>constant in total but vary per unit<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A variable cost is a cost that varies per unit of product, whereas a fixed cost is constant per unit of product. Do you agree? Explain. The correct answer and explanation is : No, I do not agree with the statement. The definition given for variable and fixed costs is incorrect. A variable cost is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-204003","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=204003"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204003\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=204003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=204003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=204003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}