Variable cost

A variable cost is the accounting name given to costs associated with the production of goods/services, which may rise or fall depending on the volume of production. 


Variable costs include the cost of raw materials, labour which change depending on the amount produced, be it goods or services.

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Apart from variable costs, there is another kind of cost involved in an enterprise — fixed cost — which remains the same no matter the magnitude of production such as overheads including any rent paid for premises.