We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Variable Cost?

Malcolm Tatum
By
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Variable costs are expenses that may change from one instance to the next, based on several different factors. Unlike a fixed cost, a variable cost can be much more difficult to budget, and may at times exceed the limits of the budget when related to an unexpected expense.

One of the easiest ways to understand a variable cost is by applying the principle to the household utilities. Each monthly billing cycle will reflect a different amount due. The variance in the monthly charge is directly related to the amount of service utilized by the household during the billing period. For example, the power bill may be relatively low one month, owing to the fact that the home required little in the way of heating or cooling. However, the next period included several days that were extremely cold. The household required more electricity to maintain a comfortable temperature inside the home. As a result of the increased consumption, the charge reflected on the next power bill will be higher.

The same set of circumstances takes place in business as well. When any factor requires a greater outlay of resources in order to maintain production, the result is a variation from the usual cost of operation. A variable cost may occur when a manufacturer experienced downtime with one machine in the production process, and must run the machine a couple of extra days to produce the usual number of goods. This could lead to additional costs such as overtime and more utility consumption for the extra days that the plant runs to make up for the down time. The result is that a variable cost for that production period is incurred.

A variable cost in business is often associated with unexpected increases in the cost of labor, the additional consumption of standard and usual resources, and unexpected factors such as an equipment breakdown. Many corporations attempt to partially compensate for covering these types of costs by building in extra resources into the budget. Understanding that even the most efficient of operations will incur some degree of variable cost make sit possible to absorb the additional expense without derailing the financial stability of the company.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.