variable cost
Output-dependent spending
A variable cost is a business expense that changes in proportion to production or sales volume.
Raw materials, shipping, and sales commissions are variable costs—they rise when output increases and fall when it decreases.
The opposite is a fixed cost, which remains constant regardless of activity level: We need to distinguish variable costs from fixed costs like rent.
- expenditureMoney paid out
- expensesMoney spent on things
- raw materialsUnprocessed production inputs
- break-even pointRevenue matching total costs
- fluctuatingShifting irregularly over time
finance · contribution margin · economics · budgeting · economies of scale · outlay · accounting · pricing models · budget constraint · cash flow · profit margin · markup · resource allocation · inventory control · financial planning · price sensitivity · profit maximization · dynamic pricing
- expensesexpenses, expense, expenditure, rent, bill
- microeconomicsdemand, supply, supply and demand, price, market
- cost analysisoperating expenses, operating expense, budget analysis, expense reports, expense
- costsoverhead
- economicssupply and demand, inflation, GDP, GNP, gross domestic product
- budget termsbudget, deficit, surplus, spending, revenue
variable costfixed cost
Expense unchanged by output
overhead · fixed charge · sunk cost · standing charge · flat fee
variable, cost, varied, varies, varying, variably, invariable, invariably, variance