What is the variable cost of a product?

A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume—they rise as production increases and fall as production decreases. A variable cost can be contrasted with a fixed cost.

Is production an independent variable?

It is the amount being measured, where the measurement depends on an independent variable. For example, the amount of bad output from a production process is the dependent variable, and the level of variability in machine output is the independent variable.

What are independent and dependent variables in business?

Variables can be dependent or independent. Dependent variables vary by the factors that influence them, but independent variables stand on their own – changes in other variables have no effect on them. An independent variable in business may affect sales, expenses and overall profitability.

How are variable costs related to production output?

Variable costs are dependent on production output or sales. The variable cost of production is a constant amount per unit produced. As the volume of production and output increases, variable costs will also increase. Conversely, when fewer products are produced, the variable costs associated with production will consequently decrease. 1

What are fixed and variable costs in a business?

The total expenses incurred by any business consist of fixed costs and variable costs. Fixed costs are expenses that remain the same regardless of production output. Whether a firm makes sales or not, it must pay its fixed costs, as these costs are independent of output.

What is the definition of total variable cost?

The total variable cost is simply the quantity of output multiplied by the variable cost per unit of output: Total Variable Cost = Total Quantity of Output X Variable Cost Per Unit of Output

When does a variable cost increase or decrease?

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.