Technical definition
A cost that changes in total in proportion to the selected activity driver within a relevant range.
How it works
Total variable cost rises with activity while variable cost per unit is assumed constant in the simple model. The correct driver may be units, hours, transactions or another causal measure.
Everyday example
A platform fee of $3 per transaction creates total variable cost of $1,500 at 500 transactions.
Common pitfall
A cost is not inherently variable; classification depends on activity measure and decision horizon.