What is Variable Cost?
- Variable cost is a cost of production that depends on the quantity produced.
How Do I Remember It?
- Think of the variable cost as “production-dependent cost.” It’s like a cost that varies depending on how much you produce.
Real World Example
- For example, in a manufacturing company, the cost of raw materials is a variable cost because it increases as the company produces more goods. Similarly, the cost of labor may be considered a variable cost if workers are paid based on the number of hours worked or units produced.
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By: Ryan Aquino
