Variable cost Guide, Meaning , Facts, Information and Description
Variable costs are costs that vary with output.
For example, for a manufacturing firm costs for raw materials are variable. When output is decreased, fewer raw material is used and thus, the cost for raw materials goes down. When output is increased, more raw material is used and these variable costs therefore rise.
There are many costs which are partly fixed and partly variable, like electricity. A certain amount of lighting and heating will be required regardless of the level of output, but beyond this minimum the cost of electricity will be determined by how much the company produces.
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