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? (1 point) Responses Fixed Fixed Start-up Start-up Variable Variable Debt

Answer 1

The example describes Variable costs. Variable costs are expenses that change in proportion to the production level; as Birdhouse, Inc. increases its production of birdhouses, the costs for wood, glue, paint, and labor also increase.