Variable Costs Definition & Example

Variable Costs Definition: A cost that changes based on the amount of activity. (It differs from a Fixed Cost by being able to change while still being the same) An example is the cost of changing the water in your pool, which will vary depending on the amount of water being used. A variable cost is a function of the amount of activity that is happening.

A variable cost is a cost that the business incurs in a range of situations. For example, the business may incur variable costs when manufacturing a product.

Home Accounting Variable costs Definition and example

20.07.2020
Accounting Adam Hill

To be on the safe side, try to actively track your spending for an entire month. Keeping track of groceries can be a little more difficult, but if you keep receipts or track your checking account transactions online, it’s no problem to calculate the exact amount. When someone talks about total cost in the financial world, they can mean many things. Business planning requires a division of costs into fixed and variable.

All costs directly attributable to the production of the product are added and deducted from sales to arrive at the gross profit. The accounting for variable and fixed costs will be different for each company, depending on the costs it works with. Economies of scale can also be a factor for companies that can produce large quantities of goods.{“@context”:”https://schema.org”,”@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”What are examples of variable costs?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Examples of variable costs are the cost of raw materials, labor, and overhead.”}},{“@type”:”Question”,”name”:”What do u mean by variable cost?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Variable cost is the cost of a product that changes depending on how much of it is produced.”}},{“@type”:”Question”,”name”:”Which is the best example of variable cost?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Variable cost is the cost of a product that changes depending on how much of it is produced.”}}]}

Frequently Asked Questions

What are examples of variable costs?

Examples of variable costs are the cost of raw materials, labor, and overhead.

What do u mean by variable cost?

Variable cost is the cost of a product that changes depending on how much of it is produced.

Which is the best example of variable cost?

Variable cost is the cost of a product that changes depending on how much of it is produced.