variable cost

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Related to Total variable costs: Total fixed costs

Variable cost

A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.

Variable Cost

A cost to a person or business that varies over time according to a number of factors. For example, a dental office must buy dental supplies, which usually cost about the same. This is a fixed cost. On the other hand, the dental office must also pay the electric and gas and water bills, which may fluctuate considerably. This is a variable cost.

variable cost

The costs of production that vary directly in proportion to the number of units produced. Variable costs often include labor expenses and raw material costs, because labor and raw material usually must be increased to increase output. Firms for which variable costs represent a high proportion of total costs are usually less likely to experience large fluctuations in earnings, because changes in sales and revenues are accompanied by nearly equal changes in costs. Compare fixed cost.
References in periodicals archive ?
The overall contribution margin is total sales minus total variable costs.
If this increase is sufficiently large, total variable costs actually rise rather than fall since the cost associated with the increased number of transactions exceeds the cost reduction due to using the less costly IB transactions.
Owner's return $100,000 Entrepreneurial overhead $200,000 Fixed costs Appraisal library $ 15,000 Office rent $ 30,000 Total fixed costs $ 45,000 Variable costs Telephones $ 7,000 Utilities $ 10,000 Supplies $ 2,000 Auto reimbursement $ 4,000 Miscellaneous $ 500 Total variable costs $ 23,500 Labor costs Secretary $ 30,000 Part-time market researcher $ 15,000 Appraiser 1 $ 60,000 Appraiser 2 $ 60,000 Appraiser 3 $ 60,000 Benefits $ 30,000 Total labor costs $255,000 Total costs $523,500 Number of appraisers 3 Cost per desk (breakeven) $174,500 Number of workable hours in a year 2,000 Breakeven cost per hour $ 87.
Vegetable farming is labor intensive, and labor accounted for 43 percent--the largest share--of total variable costs on large vegetable farms in 1990," Jinkins says.
Total variable costs accordingly went up about 2 1/2 per cent.
First, the author defines total variable costs (TVC) inconsistently by stating that variation is related to ".
The group's total variable costs are $1 million per year, while the division's variable costs are $500,000 per year.
Variable costs are based on volume, so total variable costs do change.
As indicated in Table 2, total variable costs grew by slightly more than 12 percent annually before the introduction of prospective payment.