ENTREPRENEURSHIP

Detailed explanation-1: -Operating costs are considered variable costs because they change with the production level. For example, if your sales increase by 10 percent, you will likely need more workers to keep up with demand. It increases your labor costs, which are considered operating costs.

Detailed explanation-2: -Variable costs are any expenses that change based on how much a company produces and sells. This means that variable costs increase as production rises and decrease as production falls. Some of the most common types of variable costs include labor, utility expenses, commissions, and raw materials.

Detailed explanation-3: -A common example of variable costs is operational expenses that may increase or decrease based on the business activity. A growing business may incur more operating costs such as the wages of part-time staff hired for specific projects or a rise in the cost of utilities – such as electricity, gas or water.

Detailed explanation-4: -Variable operating expenses are the actual costs associated with operating a property that vary in relation to a property’s occupancy rate or volume of some activity. Utilities are an example of a variable operating cost.