Variable Cost
Accounting glossary · Understand, connect, apply
A variable cost changes in total with the level of an activity. In a simple linear model, variable cost per unit remains constant within the relevant range.
Example
Packaging costs 2 per unit. Packing 600 units costs 1,200; packing 900 costs 1,800 if the price and packaging specification stay the same.
Remember the difference
Actual costs can change because of quantity discounts, waste or price movements. Do not assume every direct cost is variable or every indirect cost is fixed.
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Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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