![]() ![]() She also has to travel to visit the client and the cab fare is a variable expense. On one project, she has to pay for research. Piece rate labor (workers paid for each unit completed)Ī business consultant has many variable costs because she does many different types of contracts that incur their own specific expenses.Total cost is the sum of total fixed costs and variable costs. Industries with high variable costs, like the service industry, that depends heavily on labor, are much more vulnerable to competition because there is less investment required to start up. ![]() They require huge amounts of investment in machinery and other physical items to start up. Industries with high fixed costs, like airlines, are less vulnerable to competition. ![]() The more variable costs, the lower the profit margin. Variable costs change based on how many goods are produced or services provided. If sales decrease, resources and labor needed decreases as well. If sales increase, the amount of materials and labor needed also increases.
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