variable cost

Definition

A cost of labor, material or overhead that changes according to the change in the volume of production units. Combined with fixed costs, variable costs make up the total cost of production. While the total variable cost changes with increased production, the total fixed costs stays the same.

Use variable cost in a sentence

You should always know that any variable cost can change so you need to have some wiggle room in your budget.

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I realized that the variable cost would likely change, so we had to do something about it to be ready for that change.

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A variable cost in manufacturing would be labor, which will increase when product demand increases, and will decrease when demand decreases.

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cost-plus pricing step variable costs