Illustrates the term variable cost

Question

Illustrates the term variable cost?

Answer 1

Variable cost:

These costs are those costs that change along with the quantity of production. While the output rises, variable cost also raises. While the output decreases, the variable cost also reduces. Therefore, there is a direct relationship in between volume of production and variable cost. Variable costs are also termed as direct costs or prime costs. Illustrations are materials, power, wages and stores. Prime or variable cost comprises direct material cost, direct labor cost and another direct expense.