What is variable costs?
Variable costs is a term used for costs, including all variable costs, such as production costs directly related to the production and production of products. These costs are direct costs of work, direct material costs and overhead of the factory variable. They are called variable costs because they are directly connected to production processes and differ in terms of production volume. This does not include fixed costs, whether they are used during the process or are used before the start of production. Variable costs exclude costs related to the wages of employees and other employees.
Bed or direct costs can also be used to refer to variable costs. It was used for financial evaluation purposes, generating financial and fiscal reports and other economic objectives. It provides an in -depth analysis of the products and their costs. For internal cost, external trade relations, such as the relationship between variable costs and fixed costs, are useful. This accounting method is more useful,Because fixed costs calculated per unit differ when volumes change, but variable costs or marginal costs remain constant for different volumes of sales and production.
Information that is mandatory for evaluation of cost analysis is provided by this method. In addition, it is often the case that the administration bodies consider the cost of unit products to be variable costs within the absorption costs. But this is not a problem at variable costs, because it contains only variable costs related to production. Variable costs clearly explain and show the effects of fixed profits and sale costs, as fixed costs are clearly stated on the revenue exploration.
Limit cost is the costs that will deduct all variable costs of total sales. In variable costs, earnings for total sale are determined, not on the basis of the product per unit. Is determined by subtractionFixed costs from margin. Despite the fact that variable costs are more useful than any other accounting method, absorption costs are commonly used. This could be why fixed costs are as significant as variable costs.