Variable costs

Variable costs change with a defined activity level, such as units produced, sold or dispatched. Packaging per parcel and commission per order can be examples. State the activity and period concerned.[1] Variable does not mean every cost rises proportionally with every additional item.

Adding an item to the same box may affect delivery expense differently from receiving another separate order. Model costs using the unit that actually drives them. Contribution calculations should deduct the same defined variable-cost scope from the corresponding net proceeds rather than mixing cost behaviour across units.