When developing a final price for a product, the marketing manager needs to know several things about product cost. Which of the following costs, in relation to accounting costs, is most related to product output?
A. Breakeven point
B. Average cost
C. Total cost
D. Total variable cost
E. Total fixed cost
Answer: (D) Total variable costs are costs such as expenses for parts and wages and are directly related to the output of the product. The break-even point (A) has a relationship with product output, but not directly, and is not the most correct choice. Average costs (B) are calculated by dividing the total cost by the related quantities, and has a relation to product output, but not as directly as variable costs. Total cost (C) includes not only variable costs, but also fixed costs, and is not the best response. Total fixed costs (E) is not the best response because fixed costs have a "fixed" total cost no matter how many of the products are produced. The fixed costs are incurred even when there is no output.