Question

You own a software company that develops computer games. The office is rented on a yearly lease, which covers utility fees like electricity or water bills. You hired a programmer, a designer, and a script writer who are paid monthly. The business works as this: the script writer will come up with a story line, based on which the designer will draw out key figures and scenes, which will be coded by the programmer into a game. The game is sold to an online platform which pays you a a fixed amount of money to put the game on its website/application, plus 20% of the profit for each copy sold.

Which part is your variable cost?

		A) No variable cost in this case
		B) Programmer's salary
		C) Electricity bills
		D) 20% payment from each game sold

Answer 1

Variable Cost-it is a corporate expense that changes in proporation with production output. Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.

Here in this question , Variable cost is the cost which is paid on 20% profit of each game sold , that is profit vary then cost also vary

ANS- 'D'