Which of the following is a variable cost for a company that makes bread?
(a) a salaried worker
(b) an oven
(c) bread ingredients
(d) the rent for the warehouse

(a) A salaried worker

(c) Bread ingredients

Explanation:

Variable costs are costs that can be modified in the short term, such as wages and inputs in the production process. The more inputs and the more workers, the higher the variable costs. If the cost gets too high, you can fire the worker and buy fewer inputs. By contrast, fixed costs are costs that the company cannot change in the short term, only in the long term, such as capital goods (such as the oven), rent, electricity and water bills. To complete the pricing structure, there is the total cost consisting of the sum of the variable cost and the fixed cost.

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