Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs.
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero. A variable is a cost of producing the product which a company sells.
Costs that change in proportion to sales are variable costs. Common variable costs include raw materials, shipping and depletion.
A cost or expense where the total changes in proportion to changes in volume or activity.
By F. John Reh
Definition: Variable Costs are expenses that vary based on production volumes. They include material, labor, production utilities, etc.
Variable cost is an operating expense, or operating expenses as a class, that varies directly, sometimes proportionately, with sales or production, facility, utilization, or other measure of activity.
accounting system treating variable and fixed costs differently the accounting system in which variable costs are charged to cost units and fixed costs of the period are written off in full against the aggregate ...
Variable costing is used for internal management only. Its uses include: (1) inventory valuation and income determination; (2) relevant cost analysis; (3) break-even analysis and Cost-Volume-Profit (CVP) Analysis ; and (4) short-term decision-making.
Variable Costs = Total Costs - Fixed Costs
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Variable costs refers to the constantly changing cost of labor or raw materials influenced by the volume of production or internal company decisions.
Variable Cost The expenses that vary proportionately with the level of production activities or volume of output of any business. Examples include materials, electricity, and lubricants.
Fixed, variable costs and break-even
The break-even point of a business is the level of output or sales at which the revenue received by the business is exactly equal to the cost of making (or selling) that output.
Average variable cost
Definition: The average variable cost is the total variable cost divided by output.
AVERAGE VARIABLE COST
Cost determined by dividing total variable cost by the number of units of output.
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Dictionary Finance P Price Variable Cost Margin
Finance Dictionary - P Terms
variable cost - Costs that fluctuate in direct proportion to the volume of units produced.
Variable Cost A type of cost, where the change in cost is proportional to the change in the company's production. A zero production equals a zero variable cost.
Business / Finance / Variable Cost: Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. MORE
Variable Costs ...
A method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs.
activity based costing (ABC) ...
Variable Costs. Costs that change as a direct result of a change in production volume.
Part of a firm's production costs that changes according to how much OUTPUT it produces. Contrast with FIXED COSTS. Examples include some purchases of raw materials and workers' overtime payments.
variable cost: a cost of production that is directly proportional to the number of units produced
variable interest rate: an interest rate that changes, usually in relation to a standard index, during the period of the loan ...
Variable costs - production costs that change when the level of production changes, so that when more is produced the costs increase; as opposed to fixed costs.
Variable cost - A cost that varies with output levels.
Variable costing - Is a costing method in which the costs to be inventoriedinclude only the variable manufacturing costs.
Variable costing: A calculation of product costs that includes all direct manufacturing costs and variable manufacturing overhead, but not fixed manufacturing overhead.
Variable Costs. Costs that change in direct proportion to the amount of product manufactured. For example, the cost of direct materials depends on the number of units produced. Contrast with Fixed Costs.
Variable Cost: Any costs which change significantly with the level of output. The obvious example is cost of materials.
Variable costs Costs that vary with the rate of production. They include wages paid to workers and purchases of materials.
Vertical merger The joining of a firm with another to which it sells an output or from which it buys an input.
variable costs costs of production that vary with the quantity of production. (6, 8)
velocity a measure of how fast money is turned over in the economy: Velocity equals nominal GDP divided by the money supply. (24) ...
A financial indicator defined as current assets less current liabilities. If negative, it is a need, for cash resources to fund the normal activities of short-term.
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A variable cost varies in direct proportion to changes in an activity index. Mathematically, we portray the activity index as an independent variable, while total cost is considered the dependent variable.
Direct Variable Costs: costs that fluctuate with the operations of the railway. Such costs would include fuel, train crew, traffic cost, yard & terminal cost, rolling stock and infrastructure maintenance.
VARIABLE COST: In general, cost that changes with changes in the quantity of output produced.
VARIABLE COSTING IN ACTION
The preceding illustration highlights a common problem faced by many businesses. Consider the plight of a typical airline. As time nears for a scheduled departure, unsold seats represent lost revenue opportunities.
Variable costs vary in direct proportion to changes in activity. Activity is often defined as a measure of volume, such as units of goods or services produced, but can be defined as many other operational variables called cost drivers.
Variable Costs - costs that changes as production changes, for example, raw materials, production labor, storage and shipping, etc.
Any costs that vary with the level of production. For example, materials directly used to produce a product are variable costs. The more product produced, the more materials needed to produce the product.
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Variable Cost-Plus Pricing
A pricing method in which the selling price is established by adding a markup to total variable costs.
A cost that varies in proportion to the quantity produced. Theoretically, variable costs are zero if there is no production. As opposed to fixed cost.
Société d'Investissement à Capital Variable - SICAV
Tactical Asset Allocation
Variable Cost ...
- The variable costs per unit of holding an item in inventory for a specified time period.
Embedded terms in definition
The portion of a firm or industry's cost that changes with output, in contrast to fixed cost.
A tax on imports that varies over time so as to stabilize the domestic price of the imported good.
If Beginning Inventory = Ending Inventory, then Absorption Costing = Variable Costing
If Inventory Levels = Low, then Variable Costing Profit > Absorption Costing Profit ...
Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio.
Variable cost ...
A producers cost that varies as production varies, in contrast to fixed costs. Rent is an example of a fixed cost and raw materials of a var...(Read more)
Variable Interest Rate ...
Contribution: a term used in marginal costing - the difference between sale price and associated variable costs.
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If the railroad has a shipper who has no good alternative means of moving his product, the railroad cannot charge more than 180 percent of variable costs.
This is a much better situation, since no rationale competitor will price below its variable costs. Therefore the price competition tends to be less severe. I believe mortgage lending is an example.
The ratio of a company's fixed assets to variable costs is called operational leverage (also known as operational gearing). For example, if a small firm has sales revenue of £1,000,000, fixed costs of £800,000 (e.g.
If a manager using an incremental approach to pricing a managed care contract considers the liquid contents and the depreciation expense of the system as the only variable costs, he or she might conclude that a substantial discount can be offered, ...
The process involves examining cost drivers and classifying them as either fixed or variable costs. The cost accountant then uses the company’s data to figure out the estimated variable cost per cost-driver unit or fixed cost per period.
Break-even analysis finds this by dividing total fixed costs by per unit contribution to fixed costs (unit price - unit variable cost). Dollar value is calculated by multiplying break-even point by price per unit.
Some costs are clearly not avoidable, for example capital costs, therefore, avoidable costs are often variable costs.
HIGH-LOW METHOD - an algebraic procedure used to separate a semi-variable cost into the variable and fi...
HIGH-LTV EQUITY LOAN - A home equity loan that creates a total loan-to-value ratio of up to 125 percent...
A forecasting tool used by marketers that considers product price, fixed cost and variable costs in order to determine the minimum sales volume required before a company realizes a profit.
BRIC - Brazil, Russia, India, China. ...
A calculation that determines the volume of sales required to earn a profit. Assumptions regarding pricing, variable costs, and fixed costs must be provided.
At this volume of sales, the company's total revenue equals its total costs.
The point at which sales equal costs; the point is located by beakeven analysis, which determines the volume of sales at which fixed and variable costs are covered.
Company costs such as interest charges, insurance and rent, which do not vary with the level of production or sales. Variable Costs such as raw materials and labour do change with the level of production or sales.
In this article, we will theorize about depreciation and pricing. There will be no mention about maintenance or other variable costs.
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The difference between variable revenue and variable cost.
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Contribution margin: The difference between variable revenue and variable cost.
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A numerical and graphical technique that is used to determine at what point the firm will break even (a point of zero profit or loss). To compute the break-even point, divide fixed costs by price minus variable cost per unit.
A mathematical method for analyzing the relationships among a firms fixed costs, profits, and variable costs to calculate the costs of running a business.
AIB (10th Edition)
Bricks-and-mortar business ...
See also: Index, Fixed cost, Expense, Transaction, Variable costs