_____ costs vary with quantity of goods sold but remain constant on a per‑unit basis.

Question

BlackTom AI · Accepted Answer

The question presents a fill-in-the-blank about cost behavior: '_____ costs vary with quantity of goods sold but remain constant on a per‑unit basis.'

Because the provided answer is 'Variable' and no other options are listed, we can focus on why this term fits the description.

- Statement analysis: Variable costs are defined in cost accounting as costs that change in total with the level of production or sales volume. If you produce more units, total variable costs increase; if you produce fewer units, total variable costs decrease. However, per unit, variable costs remain constant because the cost per unit does not change with the level of output.

- Reason this option is correct: The phrase 'vary with quantity' aligns exactly with the nature of variable costs. The second part, 'but remain constant on a per-unit basis,' is the classic characteristic of variable costs, since the incremental cost of producing each additional unit stays the same.

- Why there are no other options to consider here: The provided data lists only one answer option, and the answer options array is empty. In a normal multiple-choice context, other choices might include fixed costs, mixed costs, or sunk costs, which would misalign with the description. For example, fixed costs do not vary with quantity, and mixed costs contain both variable and fixed components, which would not be accurately described as 'constant per unit.'

- Potential misconceptions to avoid: One might think of 'per-unit cost' as something that changes with volume, but the key idea is that while total cost changes with output, the cost per unit remains stable for variable costs. Misinterpreting this as 'costs that are always the same in total' would be incorrect.

- Summary note: Given the standard cost behavior definitions, 'Variable costs' correctly satisfy the condition of varying with quantity in total while staying constant on a per-unit basis, which is precisely what the blank seeks to identify.

KSB-111-003.2025F Quiz -- Chapter 10

_____ costs vary with quantity of goods sold but remain constant on a per‑unit basis.

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