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Income Statements and Variable Costs

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On the income statement, which of the following would be classified as a variable cost? (select 1)
- Promotion Expense
- R&D Expense
- Depreciation Expense
- Direct Material Expense

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Solution Preview

A variable cost is one that fluctuates with the company's production. This means that when a company makes more of an item, the expense will increase accordingly. Same goes if it produces less of an item.

A promotion expense (or ...

Solution Summary

This solution provides a short definition of a variable cost with examples and also explains why other options are incorrect.