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A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced....

Question:

A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced. This is an example of a(n)

A. fixed cost.

B. direct cost.

C. variable cost.

D. indirect cost.

Direct cost:

Direct cost refers to the costs which are directly related to the production activities of a specific goods or service.

Answer and Explanation:

Cost ($) (A) Units produced(B) Per unit cost($)(A/B)
50,000 25,000 2
100,000 50,000 2

Since the variable cost per unit is same for both the levels, so the cost per unit is also same.

Therefore, the present cost is variable cost.


Learn more about this topic:

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