Which of the following is an example of a cost that varies in total as the number of units produced changes?

Question

BlackTom AI · Accepted Answer

Direct materials cost varies in total directly with the number of units produced because each unit requires a measurable amount of material.

1) Relevant knowledge points and concepts
- Variable cost: a cost that changes in total in direct proportion to activity level (units produced). Per-unit variable cost remains constant, while total variable cost = unit variable cost × quantity.
- Fixed cost: a cost that remains the same in total over the relevant range of activity regardless of units produced (e.g., salaries, property taxes, straight-line depreciation).

2) Step-by-step reasoning
- Identify each option and classify it:
  a) Salary of a production supervisor — typically a fixed cost paid regardless of units produced.
  b) Direct materials cost — materials are consumed for each unit produced, so total materials cost increases with each additional unit.
  c) Property taxes on factory buildings — levied on property value and do not change with production volume (fixed).
  d) Straight-line depreciation on factory equipment — allocates a constant expense per period regardless of how many units are made (fixed).
- Apply the variable-cost definition to direct materials: total direct materials cost = (materials per unit) × (number of units produced).

3) Example calculation (intermediate steps)
- If material per unit = $4 and units produced = 250:
  - Total direct materials cost = $4/unit × 250 units = $1,000.
- If production increases to 300 units:
  - Total direct materials cost = $4 × 300 = $1,200.
- This demonstrates the total cost changes as units change, while the per-unit cost remains $4.

4) Why the correct answer is correct
- Direct materials are consumed proportionally with production; therefore total direct materials cost varies with output. This matches the definition of a variable cost.

5) Why other options are incorrect
- Supervisor salary, property taxes, and straight-line depreciation are fixed in total over the relevant range and do not vary directly with units produced.

6) Conclusion
- The correct choice is direct materials cost, which matches the provided answer.

Which of the following is an example of a cost that varies in total as the number of units produced changes?Single choice

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