Variable cost: Difference between revisions

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Contrasted with a fixed cost.
Contrasted with a fixed cost.
Variable costs are generally easier to change - especially to reduce - when necessary, compared with fixed costs.
Therefore a lower-risk operational strategy is normally to have a lower proportion of fixed costs in the total cost structure, and a higher proportion of variable costs.
This proportion is sometimes known as operational gearing.




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* [[Contribution]]
* [[Contribution]]
* [[Cost behaviour]]
* [[Cost behaviour]]
* [[Direct costs]]
* [[Expense]]
* [[Fixed cost]]
* [[Fixed cost]]
* [[Flexible budgeting]]
* [[Flexible budgeting]]
* [[Gearing]]
* [[Indirect costs]]
* [[Management accounting]]
* [[Management accounting]]
* [[Operational gearing]]
* [[Semi-fixed cost]]
* [[Semi-fixed cost]]
* [[Semi-variable cost]]
* [[Semi-variable cost]]
* [[Total cost]]
* [[Total cost]]
* [[Variable]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]

Latest revision as of 16:15, 6 August 2021

Cost and management accounting.

A variable cost is a cost which increases as the level of production (or other activity) increases, because it is incurred as a consequence of the production or other activity.

Contrasted with a fixed cost.


Variable costs are generally easier to change - especially to reduce - when necessary, compared with fixed costs.

Therefore a lower-risk operational strategy is normally to have a lower proportion of fixed costs in the total cost structure, and a higher proportion of variable costs.

This proportion is sometimes known as operational gearing.


See also