Total variable costs equal what expression?

Total variable costs equal what expression?

• A. Fixed cost × activity level
• B. Total variable cost per unit
• C. Total cost − fixed cost
• D. Variable cost per unit × activity level

Answer: (D)

Variable costs change with the level of activity. The total variable cost over a period is found by multiplying the variable cost per unit by the number of units (the activity level) produced. So the total variable costs equal variable cost per unit × activity level. Each extra unit adds the same variable cost, so total variable cost rises in direct proportion to activity. The other forms aren’t the standard way to express TVC: fixed cost × activity level would imply fixed costs vary with activity, total cost − fixed cost requires knowing total cost (not a direct definition), and variable cost per unit is only the amount per unit, not the total across all units.

Variable costs change with the level of activity. The total variable cost over a period is found by multiplying the variable cost per unit by the number of units (the activity level) produced. So the total variable costs equal variable cost per unit × activity level. Each extra unit adds the same variable cost, so total variable cost rises in direct proportion to activity. The other forms aren’t the standard way to express TVC: fixed cost × activity level would imply fixed costs vary with activity, total cost − fixed cost requires knowing total cost (not a direct definition), and variable cost per unit is only the amount per unit, not the total across all units.