What characterizes variable costs?

Variable costs are defined as costs that vary directly with the level of production or output. This means that as production increases, variable costs will also increase because they are tied to the volume of goods produced. For instance, materials, labor, and energy required for production are typical examples of variable costs; they increase in total as more units are produced.

In contrast, fixed costs remain constant regardless of production levels, which distinguishes them from variable costs. Fixed costs do not fluctuate with the production output and include expenses like rent and salaries. Other options, which describe stable or predictable costs or specific types of costs unrelated to production levels, further illustrate that variable costs are defined explicitly by their relationship to production output.