WedgeWelly has many variable costs when running the business - Edexcel - GCSE Business - Question 15 - 2016 - Paper 1
Question 15
WedgeWelly has many variable costs when running the business.
Which one of the following is an example of a variable cost?
Select one answer.
A. Loan repayments
B. ... show full transcript
Worked Solution & Example Answer:WedgeWelly has many variable costs when running the business - Edexcel - GCSE Business - Question 15 - 2016 - Paper 1
Step 1
Identify the types of costs
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Answer
Understand that costs in business can be categorized as fixed or variable. Fixed costs remain constant regardless of the level of production, while variable costs fluctuate with production volume.
Step 2
Analyze the options
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Answer
Evaluate each option to determine whether it is a variable cost:
A. Loan repayments: Typically a fixed cost.
B. Salaries: Generally considered a fixed cost, although overtime can vary.
C. Insurance: Usually a fixed cost.
D. Raw materials: This generally varies with production levels, making it a classic example of a variable cost.
Step 3
Select the correct answer
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Answer
Based on the analysis, the correct choice is D. Raw materials, as they directly correlate with the production output and vary accordingly.
