Cost is the measurement of resources that must be expended to obtain an object or complete an activity. It is classified in different ways, depending on its nature; variable and fixed costs are one of them.

Variable cost is a corporate expense that varies directly with the level of production. The more we produce, the more variable costs we incur. If no production or services activities are provided, then there should be no variable costs.

Raw materials, labour and operating expenses, etc, directly related to production are considered variable costs.