Convert fixed costs to variable costs
A Variable costs change based on the amount of output produced. Variable costs include labor costs, fees and raw materials. Fixed costs remain the same regardless of production volume. Fixed costs include lease and rent payments, insurance premiums, and interest payments.
The variables are the costs incurred by the firm and change as production and sales change. Unlike fixed costs, they are not fixed costs. As production increases, variable costs increase due to the need to purchase raw materials in large quantities.
Common examples of variable costs are cost of goods sold (COGS), raw materials and inputs used in production, packaging, wages and commissions, and certain incidental costs.
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