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Variable costs change in proportion to changes in the activity base. Activity bases are activities that cause the cost to change including units produced, and
Variable costs change in proportion to changes in the activity base. Activity bases are activities that cause the cost to change including units produced, and direct materials and direct labor costs are typically classified as variable costs (Warren, et al. 2023). For example, the fuel cost for a passenger airline is a variable cost, and the activity base is the number of miles flown daily, monthly, or yearly. Another example is an attorney's fee, where the activity base is the number of hours spent on a case, known as billable hours
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