Q1: Break even point represents the condition, when the company runs under no profit no loss condition. In break even analysis, total cost comprises of fixed cost

ANS:B - plus variable cost.

Variable costs are expenses that change in proportion to the level of production or sales. In other words, as production increases, variable costs also increase, and as production decreases, variable costs decrease. These costs vary based on the volume of goods or services produced and sold by the company. Examples of variable costs include:

1. Raw materials: The cost of materials used to produce goods. As production increases, more raw materials are needed, leading to higher costs.
2. Direct labor: Wages or salaries paid to workers directly involved in the production process. As production increases, more labor is required, resulting in higher labor costs.
3. Utilities: Expenses such as electricity, water, and gas used in the production process. As production increases, more utilities are consumed, leading to higher utility bills.
4. Packaging and shipping: Costs associated with packaging finished products and shipping them to customers. As production increases, more products need to be packaged and shipped, resulting in higher costs.
5. Sales commissions: Payments made to salespeople or agents based on the volume of sales achieved. As sales increase, more commissions are paid out, leading to higher costs.

Variable costs are directly tied to the company's level of activity and can fluctuate from one period to another. They are an essential component of the total cost structure and are included in break-even analysis to determine the level of sales needed to cover all costs and achieve a break-even point.