Variable Cost
A cost that rises as production or service levels rise.
Variable costs scale per unit, which is what makes contribution per unit a usable planning number.
Often Confused With
- Direct Cost
- Direct is about traceability to a unit; variable is about whether the cost moves with output. A cost can be direct and fixed.
- Fixed Cost
- Fixed costs hold steady as output changes; variable costs rise with it.
Taught In
See Also
3.4.B.2