Variable cost (VC) changes according to the quantity of a good or
service being produced. It includes inputs like labor and raw materials.
Variable costs are also the sum of marginal costs over all of the units
produced (referred to as normal costs). For example, in the case of a clothing
manufacturer, the variable costs would be the cost of the direct material
(cloth) and the direct labor. The amount of materials and labor that is needed
for each shirt increases in direct proportion to the number of shirts produced.
The cost “varies” according to production.
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