Question

Expenditure on raw material is _________ cost​

Answer 1

Expenditure on raw materials is a variable cost.

• Raw materials are those goods that are used for production. These are finished goods that are processed in the factory to produce want satisfying goods to the consumers.
• The expenditure on raw materials is a variable cost because it can be eliminated if the production function is stopped for a while. When a company is running in losses it can reduce its variable cost by stopping production for a while and using the existing inventory.