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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.