Variable costs

Variable costs are expenses that vary directly with the size of a firm's output. As output increases over the range of production, the variable costs increase. Variable costs include raw materials, labor, fuel, and wear and tear on equipment. Costs which do not change with the size of a firm's output are fixed costs.

Combined with fixed costs, variable costs make up the total cost of production.

## External links[edit]

* Variable cost BusinessDictionary.com