The correct answer is: B. changes with the volume of production.
Variable costs are costs that change in direct proportion to the volume of production. For example, the cost of raw materials is a variable cost, because the more products you produce, the more raw materials you will need.
Fixed costs are costs that do not change in proportion to the volume of production. For example, the cost of rent is a fixed cost, because the rent you pay will be the same regardless of how many products you produce.
Mixed costs are costs that have both variable and fixed components. For example, the cost of electricity is a mixed cost, because the amount of electricity you use will vary depending on the volume of production, but you will still have to pay a certain amount for the electricity that you use, even if you don’t produce anything.
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