Final answer:
Variable costs fluctuate with production levels, including transportation and delivery costs, cost of material to make products, and sales commissions.
Step-by-step explanation:
In business, variable costs are expenses that change in direct proportion to the level of output or production. They contrast with fixed costs, which remain constant regardless of production levels. Examples of variable expenses include:
- Transportation and delivery costs: These costs vary depending on the quantity of goods that needs to be transported.
- Cost of material to make products: The more products you make, the more materials you will need, making this a variable cost.
- Sales Commissions: Commissions often depend on the amount of sales generated, so they increase or decrease with the sales volume.
On the other hand, fixed costs such as rent and insurance do not vary with production levels and remain constant over a period of time.