Question

When opening a business, an owner will have some costs that increase and decrease as production changes. For example, if Birdhouse, Inc. has an increase in orders for birdhouses, their need for wood, glues, paint, and labor will also increase. What type of cost does this example describe?

Responses

Fixed

Fixed - no response given

Start-up

Start-up - no response given

Variable

Variable - no response given

Debt

Answer 1

Variable

These costs (wood, glue, paint, labor) rise and fall with output, so they are variable costs rather than fixed, start-up, or debt-related costs.