A bicycle repair business has increased the number of repairs completed each week. Its mechanic is paid for each repair, while the workshop lease is unchang...
Question 1 Report
A bicycle repair business has increased the number of repairs completed each week. Its mechanic is paid for each repair, while the workshop lease is unchanged. State two variable costs the business may face. [2]
Answer Details
(a) Two valid variable costs include wages paid per repair and replacement parts. [2]
Other acceptable examples are lubricants and cleaning materials, or electricity used by repair equipment. Variable costs change as the number of repairs changes. For example, completing more repairs requires more parts and, where the mechanic is paid per repair, more wage payments. The unchanged workshop lease is a fixed cost, so it should not be used here.
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