question archive On the Income Statement, which of the following would be classified as a variable cost? Promotion Expense R and D Expense Depreciation Expense Direct Labor Expense
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On the Income Statement, which of the following would be classified as a variable cost? Promotion Expense R and D Expense Depreciation Expense Direct Labor Expense
Following are not part of variable costs :
Promotion expense : It is a type of fixed cost since promotion expense will be mostly independent of quantity of goods sold. Thus for a a certain promotion expense, company may end up selling 100 units or 200 units.
R & D expense : It is a fixed expense which company incurs year on year to carry on its research and innovation activities
Depreciation expense : it is a separate type of expense which is treated separately in books of accounts
“Direct labor expense” however is a type of variable expense since it will vary with change with quantity produced. More quantity produced, more will be direct labour expense.
ANSWER : DIRECT LABOR EXPENSE |