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

As the manufacturing plant created more items their variable costs continued to increase while their fixed cost remained constant.

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While fixed costs remain the same, variable costs can vary throughout a project due to unexpected material and labor costs unforeseen in the planning stage.

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break-even analysis contribution margin