An example of a variable cost is?

The choice of cost of goods sold as an example of a variable cost is accurate because variable costs fluctuate with production levels. They are directly associated with the creation of products or services, meaning that as production increases, the cost of goods sold also increases in proportion to the number of units produced. This includes costs for materials and labor directly involved in the manufacturing process.

In contrast, monthly rent, utilities, and salaries generally fall into the category of fixed or semi-variable costs. Monthly rent remains constant regardless of the level of production and does not vary with sales volume. Utilities might have some variable components, but they often include a fixed base charge regardless of usage. Salaries, when they are fixed salaries, do not change with production levels either. Therefore, they do not reflect the nature of variable costs as clearly as the cost of goods sold does.