A variable cost is a cost that fluctuates with a company’s activity, increasing or decreasing in correlation with the volumes produced or sold. Examples include expenses related to the purchase of raw materials, shipping costs, or specific marketing campaign costs such as file rental or postage. The increase in these costs is not always directly proportional to activity, as larger volumes can lead to more favorable purchasing terms. Variable costs are generally distinguished from fixed costs, and a significant portion of fixed costs contributes to improved performance when volumes increase by reducing the unit cost of production.