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. | |||
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* [[Fixed cost]] | * [[Fixed cost]] | ||
* [[Flexible budgeting]] | * [[Flexible budgeting]] | ||
* [[Gearing]] | |||
* [[Indirect costs]] | * [[Indirect costs]] | ||
* [[Management accounting]] | * [[Management accounting]] | ||
* [[Operational gearing]] | |||
* [[Semi-fixed cost]] | * [[Semi-fixed cost]] | ||
* [[Semi-variable cost]] | * [[Semi-variable cost]] | ||
Revision as of 15:15, 3 April 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.
