Any expense, which varies directly with production, revenue, or other measurement of business volume. The variable costs of book production include the expense of paper, ink, and binding. The fixed costs include rent, heat, electricity, and maintenance expense for the printing plant and binding department, In contrast to variable costs, fixed costs are relatively firm or unchanging in amount and are incurred regardless of the level of volume or income. See also BREAK-EVEN POINT; DIRECT COSTS; FIXED COSTS; UNIT COST
Those components of total farm costs that are variable in the sense of changing according to the scale of the activity or enterprise in which they are incurred. They may be in the form of either direct costs or indirect costs.
Operating costs which, in the aggregate, vary either directly or indirectly in relation to any change in the volume of gas sold and/or transported; i.e., compressor station fuel and expenses. See FIXED COST.
Any costs that vary with the level of production. For example, materials directly used to produce a product are variable costs. The more product produced, the more materials needed to produce the product.
Costs that vary directly with the level of activity within a short time. Examples include costs of moving cargo inland on trains or trucks, stevedoring in some ports, and short-term equipment leases. For business analysis, all costs are either defined as variable or fixed. For a business to break even, all fixed costs must be covered. To make a profit, all variable and fixed costs must be recovered plus some extra amount.
A cost that varies with changes in the quantity of output produced when other factors are held constant. The cost of material handling to an activity, for example, varies according to the number of material deliveries and pickups to and from that activity.
A cost or expense that increases in total as volume or an activity increases. (Or decreases in total as volume or an activity decreases.) For example, if a company pays a sales commission on all of its sales, commission expense is a variable expense. The cost of gasoline is a variable cost in relationship to vehicle miles driven. To Top
Variable costs are expenses that change in proportion to the activity of a business. Along with fixed costs, variable costs make up the two components of total cost. Direct Costs, however, are costs that can be associated with a particular cost object.