(plural variable costs)
- (accounting) A cost that changes with the change in volume of activity of an organization.
- Variable costs of nuclear-generated electricity seem low.
- Variable costs may actually vary with the number of shifts, the number of set-ups, or many other specific activities.
variable cost - Investment & Finance Definition
A cost that changes based on the level of sales or production. Examples of a variable cost are temporary labor and materials that are used to produce goods. Variable costs contrast with fixed costs, which don’t vary with production or sales levels. For example, a manufacturing plant has fixed costs of rent, depreciation, and insurance. These expenses will continue to be incurred even if the plant closes for a two-week holiday.