What is Variable costs?
Costs that rise and fall with sales, like ingredients or laundry.
Variable costs are incurred for each unit sold. No sales, no variable costs.
Formula
Variable costs = Variable cost per unit × Units sold
Example
A restaurant whose ingredients cost $4 per meal has $400 of variable costs on a 100-meal day.
Why it matters
The price minus the variable cost of a sale is its contribution towards fixed costs and profit.
🏨 See it in a hotel game
"Facility ingredients" in the Finance tab grows with the number of visitors.
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