____ are also known as direct costs A. average variable costs B. average fixed costs C. variable costs D. total fixed costsReset Selection

Break Down the Problem

1. Identify the term being defined in the question: direct costs.
2. Understand what constitutes direct costs in the context of business and economics.

Relevant Concepts

1. Direct costs refer specifically to expenses that can be directly attributed to the production of a specific good or service.
2. Indirect costs, on the other hand, are expenses that cannot be traced back to a specific product.

Analysis and Detail

1. Average Variable Costs: These costs vary with production levels, but they are not inherently "direct" costs as they include fixed components as well.
2. Average Fixed Costs: These costs do not change with production volume and are not classified as direct costs.
3. Variable Costs: These are expenses that vary directly with the level of production; for example, raw materials and labor associated with making a product can be considered direct costs.
4. Total Fixed Costs: Like average fixed costs, these do not change and cannot be classified as direct costs since they do not vary with production levels.

Verify and Summarize

Considering the definitions provided, the option that aligns most closely with the concept of direct costs is "C. variable costs" because they directly affect the cost of production.

Final Answer

C. variable costs