The change in total costs in response to the change in some activity. For example, some of the costs of owning and operating a vehicle will increase in total with an increase in miles driven. These are referred to as variable costs and include gasoline and tires. Some other costs will not change in total with a reasonable increase in miles driven. These costs are referred to as fixed costs and include insurance and parking. Other costs might be part variable and part fixed. These are referred to as mixed costs and an example might be depreciation.
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For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
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