Costs known as “variables” alter according to the volume of production or sales. Depending on how many goods or services are produced or sold, these expenses rise or fall. Variable expenses, as opposed to fixed costs, can change from one period to the next. What Does Tourism’s Variable Cost Mean?
Variable costs in the tourism industry are expenses that change according to the volume of travelers to a specific location or activity. The price of food and drink, entrance fees, and transportation expenses are a few examples of variable costs in the tourism sector. These expenses are based on how many people visit a location or site. Different Variable Cost Types
1. Direct Materials – These are the supplies used directly in the production of items. Depending on how many materials are required to manufacture a product, different direct material costs apply.
3. Commission – This refers to the sum that salespeople are paid as a percentage of the revenue they bring in. Depending on how many sales are done, commission fees change.
4. Packaging and shipping expenses – These are the prices related to product packaging and delivery to clients. The amount of products being transported affects how much packaging and shipping will cost.
The price of the raw materials required to make a product is an illustration of a variable cost on Quizlet. The amount of raw materials required to make a product determines the cost of those materials. The price of raw resources rises along with the creation of items. Which of the following does not represent a variable cost?
Variable costs do not include fixed costs. No matter how much is produced or sold, fixed costs are fixed. Rent, salary, and insurance are a few examples of fixed costs. Even if the company produces or sells more goods or services, these costs remain the same.
In conclusion, organizations should understand variable costs because it will help them successfully control their expenses. Direct materials, direct labor, commission, packaging, and shipping are a few examples of variable costs—expenses that vary according to the volume of production or sales. Variable costs in the tourism sector include those for food and drink, entrance fees, and transportation. On the other hand, fixed costs are not examples of variable costs because they are constant regardless of the volume of production or sales.
Prime cost is, in fact, a variable expense. Prime costs are the direct expenses required to manufacture a good or service, such as the price of labor and raw materials. These expenses are variable since they change according on the volume of output.
Rent, salary, and insurance are examples of fixed costs, which do not alter regardless of the volume of output or sales. However, variable costs, which include the price of raw materials, labor, and transportation, do vary depending on the volume of production or sales. Taxes on real estate, leasing payments, and permanent staff salary are a few examples of fixed costs. The price of the raw materials used in production, the hourly pay of temporary employees, and the shipping charges associated with each sold unit are a few examples of variable costs.