What formula represents Total Variable Cost (TVC)?

The formula for Total Variable Cost (TVC) is derived from understanding that variable costs change with the level of production or sales. Total Variable Cost represents the cumulative cost that varies directly with the number of units produced or sold. By multiplying the variable cost incurred per unit by the number of units sold, you effectively capture the total dynamic cost associated with producing or selling those units.

This relationship highlights that as production increases, the total variable cost will also increase proportionally. For instance, if the variable cost is $5 per unit and you sell 100 units, the total variable cost would be $500.

The other options do not align with the definition of Total Variable Cost. Fixed costs remain constant regardless of production levels, and using fixed costs in calculations wouldn’t accurately represent the variable nature of TVC. Similarly, dividing total costs by the number of units sold provides the average cost per unit rather than isolating variable costs. Finally, sales revenue multiplied by variable cost per unit does not yield total variable costs, as it misunderstands the fundamental relationship between these financial components.