Sunday, August 16, 2009

Industry Variable costs

Hi guys,
Variable costs are those whose total will vary proportionally to the level of activity ort changes in volume of production.Variable costs will be incurred onlu when there is production, or when activity is being carried out.It lis important to note that total variable costs vary in direct proportion to changes in volume of production. An increase in volume means a proportionate increasse in variable cost. That is Why there is a linear relationship between volume and variable cost. But the variable cost charged per unir remains constant or is not affected by athe volume of production. Thank you. 
 

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