6 Aug 2018, 14:39 — 1 min read
Definition: A variable cost is a corporate expense that changes in proportion with production output. Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.
Example: When the tyre manufacturer decided to scale up production to twice the present level, it was estimated that variable cost would rise by 75%.
Business Insight: Variable cost always goes up when production goes up, and decreases when production decreases.
Posted byGlobalLinker Staff
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