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Variable Cost
Variable Cost
It refers to a cost the total of which varies for a certain period proportionally according to the product's production and sales volume. In this way, the variable cost has a direct relationship with the product's production, it is also called Product Cost or Direct Cost. In contrast to Marginal Profit, it can be called Marginal Cost.
The Variable Cost can be classified into the following three according to the variable rate:
Related term: Cost Structure
It refers to a cost the total of which varies for a certain period proportionally according to the product's production and sales volume. In this way, the variable cost has a direct relationship with the product's production, it is also called Product Cost or Direct Cost. In contrast to Marginal Profit, it can be called Marginal Cost.
The Variable Cost can be classified into the following three according to the variable rate:
- Proportional cost:
- It varies directly proportional to the product's production and sales volume.
- Progressive cost:
- It varies according to the product's production and sales volume, but its percentage is above that of production and sales volume.
- Degressive cost:
- It varies according to the product's production and sales volume, but its percentage is below that of production and sales volume
Related term: Cost Structure
Reference：JIT Business Research Mr. Hirano Hiroyuki