PRESENTATION OUTLINE
Definition
costs that change in proportion to the good or service that a business produces.
Example
Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.
Example
Commissions. Salespeople are paid a commission only if they sell products or services, so this is clearly a variable cost.
Example
Credit card fees. Fees are only charged to a business if it accepts credit card purchases from customers. Only the credit card fees that are a percentage of sales should be considered variable.
