In a textile factory, the cost of cotton used is a typical example of

The cost of cotton used in a textile factory is a typical example of a variable cost. This is because the cost of cotton used in the production process is directly proportional to the level of production. In other words, as the level of production increases, the cost of cotton used also increases. Therefore, the cost of cotton used is not a fixed cost, which remains constant regardless of the level of production, nor is it an average cost, which is calculated by dividing the total cost by the level of production. Instead, it is a variable cost, which varies with the level of production.