Entity: VARIABLE-COST
Variable-cost refers to an expense that changes in proportion to increases and decreases in production or sales volume.
Variable-Cost
Etymology
The term 'variable-cost' originates from the concept of costs that vary with changes in production or sales volume.
Definition
A variable cost is an expense that changes in direct proportion to a company’s level of production or sales volume. Examples include raw materials, direct labor, and sales commissions.
Historical Context
Variable costs have been a fundamental concept in accounting and economics, helping businesses understand the cost structure of their operations.
Cultural Significance
Understanding variable costs is crucial for businesses to make informed decisions on pricing, production levels, and overall financial performance.
Related Concepts
Variable costing, direct costing, marginal costing, and total cost analysis are related concepts that further explore the impact of variable costs on business operations.
See Also
A variable cost is an expense that fluctuates based on the level of production or sales volume, such as raw materials, direct labor, and sales commissions.