ECONOMICS

Detailed explanation-1: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.

Detailed explanation-2: -Raw materials are categorized as direct expenses on a company’s income statement because they contribute directly to the making of a product or delivery of a service. As raw material costs change along with production volumes, they are considered to be variable costs.

Detailed explanation-3: -Common examples of variable costs include costs of goods sold (COGS), raw materials and inputs to production, packaging, wages, and commissions, and certain utilities (for example, electricity or gas that increases with production capacity).

Detailed explanation-4: -Variable manufacturing costs fluctuate in proportion to the production level, while mixed manufacturing costs are a combination of variable and fixed components. Variable manufacturing costs are direct materials (like raw materials) and direct labor.