Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal cost

Marginal cost

In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good...

s over all units produced. It can also be considered normal costs. Fixed cost

Fixed cost

In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs...

s and variable costs make up the two components of total cost

Total cost

In economics, and cost accounting, total cost describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a...

. Direct Costs, however, are costs that can easily be associated with a particular cost object

Cost object

A cost object is a tangible input for a product manufactured/Service provided, like labor or material. For example a cloth manufacturing firm requires some amount of predetermined labor and predetermined raw material for any amount of cloth being manufactured...

. However, not all variable costs are direct costs. For example, variable manufacturing overhead

Overhead (business)

In business, overhead or overhead expense refers to an ongoing expense of operating a business...

 costs are variable costs that are indirect costs

Indirect costs

Indirect costs are costs that are not directly accountable to a cost object . Indirect costs may be either fixed or variable. Indirect costs include taxes, administration, personnel and security costs, and are also known as overhead.There are two types of Indirect Costs...

, not direct costs.