Variable costs are costs that fluctuate in direct proportion to the volume of units produced.

Business Terms Glossary

What Is Variable Cost?

Variable costs are costs that fluctuate in direct proportion to the volume of units produced. The best and most obvious example are physical costs of goods sold, direct costs, such as materials, products purchased for resale, production costs and overhead, etc. The concept of variable cost is an important component of risk in a company,...

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What Are Channel Conflicts?

Channel conflicts refers to a situation where one or more channel members believe another channel member is engaged in behavior that is preventing it from achieving its goals. Channel conflict most often relates to pricing issues.  

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What Does Plant and Equipment Mean?

Plant and equipment is the same as long-term, fixed, or capital assets. These are generally assets that are depreciated over terms of more than five years, and are likely to last that long, too.

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What Is a Long-Term Interest Rate?

Long-term interest rate is the interest rate charged on long-term debt.

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What Is Product Line Pricing?

Product line pricing refers to setting of prices for all items in a product line involving the lowest-priced product price, the highest price product, and price differentials for all other products in the line.

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What Are Obligations Incurred?

Obligations incurred are business costs or expenses that need to be paid, but wait for a time as accounts payable (in other words, bills to be paid as part of the normal course of business) instead of being paid immediately. For more on the subject, see our article on the LivePlan blog: What Is Accounts...

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What Is Cost of Sales?

Cost of sales refers to the costs associated with producing the sales. In a standard manufacturing or distribution company, this is about the same as the cost of the goods sold. In a services company, this is more likely to be personnel costs for people delivering the service, or subcontracting costs. This term is commonly...

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What Is Break-Even Point?

Break-even point is output of the standard break-even analysis. The unit sales volumes or actual sales amounts that a company needs to equal its running expense rate and not lose or make money in a given month. The formula for break-even point in units is: The formula for break-even point in sales amount is: =...

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Variable costs are costs that fluctuate in direct proportion to the volume of units produced.