variable cost

[Ajithkumar.V]

variable cost

 

A periodic cost that varies in step with the output or the sales revenue of a company.

 

Variable costs include raw material, energy usage, labor, distribution costs, etc. Companies with high variable costs are significantly different from those with high fixed costs. This difference affects the financial structure of the company as well as its pricing and profits. Thebreakeven point in such companies (in comparison with high fixed cost companies) is typically at a much lower level of output, but their marginal profit(rate of contribution) is also much lower.

[nishat Parveen]

Eg,you produce sparkplugs and the copper involved in the production is variable cost,it means if you stop producing sparkplugs there will be no cost of copper

[lavanya]

Variable costs can include direct material costs or direct labour costs necessary to complete a certain project.

For example:A company may have variable costs associated with the packaging of one of its products.

[jeevithakomu]

Variable cost are expenses that fluctuate proportionally with the quantity of output.

Eg : Direct materials , piece rate labor , production supplies , commissions etc.

[Deepika Nautiyal]

The term variable cost is not to be confused with variable costing, which is an accounting method related to reporting variable costs.

Total Variable Cost = Total Quantity of Output x Variable Cost Per Unit of Output

 

 

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