Variable Cost
Jump to navigation
Jump to search
Description
A variable cost varies, in total, in direct proportion to changes in the level of activity. Common examples of variable costs include cost of goods sold for a merchandising company, direct materials, direct labor, variable elements of manufacturing overhead, such as indirect materials, supplies, and power, and variable elements of selling and administrative expenses, such as commissions and shipping costs.
These costs vary directly with the level of production.
Concept Prerequisite
Wikipedia Reference
http://en.wikipedia.org/wiki/Variable cost
Learning Material
Covered in Topic(s)
| Cost Terms Concepts and Classification |
| Pricing Strategies |