A variable cost is one that is modified according to variations in the volume of production (or level of activity), it involves both goods and services. That is, if the level of activity decreases, these costs decrease, while if the level of activity increases, so do these types of costs.

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Except in cases of structural changes, in economic units, variable costs tend to have linear behavior, which gives them the characteristic of having an average value per unit that tends to be constant. All those costs that are not considered variable are fixed. This distinction is essential to be used in cost-based decision tools.

In microeconomic theory, variable costs are usually considered non-linear, with a first section of increasing returns followed by a section of decreasing returns.

In a Supermarket, cashiers are a variable cost, since managers can easily adjust the hours they work to adapt them to the number of buyers who come to the store.

Variable costs, as their name indicates, differ with the level of production and are associated with the use of variable factors, such as labor and raw materials. Since the quantities of factors increase as production increases, variable costs increase when production does so.

Variable costs (CV): they depend on the amount of variable factors used; therefore, the level of production.

Variable costs are those whose total physical and/or abstract (non-monetary) component presents a highly positive correlation with the level of activity although the variability relationship is not the same for different levels of activity.

Variable costs in their most simplified expression present a linear behavior. But as its own definition points out, we know that throughout its consumption it is highly probable that discontinuities will occur{{Broken link|1=[ discontinuities.

For example, a company pays for raw materials. When your activity decreases you will need fewer raw materials, and therefore you will spend less. When the activity increases, more material will be needed and the expense will increase.