Total cost is equal to which of the following?

Total cost is equal to which of the following?

• A. Total revenue
• B. Variable costs plus fixed costs
• C. Price times quantity
• D. Profit plus revenue

Answer: (B)

Total cost is the sum of fixed costs and variable costs. Fixed costs are expenses that don’t change with how many units you produce, like rent or salaries. Variable costs vary with output, such as materials and direct labor. Add these together to get total cost. The other ideas mix revenue or profit with cost: price times quantity gives total revenue, not cost, and profit plus revenue isn’t a standard way to define cost. So the total cost equals fixed costs plus variable costs.

Total cost is the sum of fixed costs and variable costs. Fixed costs are expenses that don’t change with how many units you produce, like rent or salaries. Variable costs vary with output, such as materials and direct labor. Add these together to get total cost. The other ideas mix revenue or profit with cost: price times quantity gives total revenue, not cost, and profit plus revenue isn’t a standard way to define cost. So the total cost equals fixed costs plus variable costs.