Answer (B) is correct . Variable costs vary directly with the level of production. As production increases or decreases, material cost increases or decreases, usually in a direct relationship.
Answer (A) is incorrect because The president’s salary usually does not vary with production levels.
Answer (C) is incorrect because Interest charges are independent of production levels. They are called “fixed” costs and are elements of overhead.
Answer (D) is incorrect because Property taxes are independent of production levels. They are called “fixed” costs and are elements of overhead.
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