How variable and fixed cost, impact sales and profit? Please justify your answer with suitable example.

Variable costs are corporate expenses that vary in direct proportion to the quantity of output. Unlike fixed costs, which remain constant regardless of output, variable costs are a direct function of production volume, rising whenever production expands and falling whenever it contracts.

Examples of common variable costs include raw materials, packaging, and labor directly involved in a company's manufacturing process.

Variable Costs, as the name demonstrates, are subject to change. These are directly proportional to the targeted or desired quantity of the Product. Therefore, the change (increase or decrease) in production volume will leave a remarkable impact on variable costs.Whereas fixed costs are as the name implies are fixed and will have to be accounted for & paid by the company whatever is the level of Production....

Examples of variable costs are Raw Materials, Direct Labour,All costs directly attributable to production (electrical power,fueling,packaging)..

Examples of fixed cost are HO building rent, telephone expense, directors, accounting staff salaries etc etc.

It is very important to monitor the variable cost to get positive results of production and per unit gain and to use the scarce resouce of an organization and it would also be of crucial importance to decide about necessay fixed cost because the would be paid in all circumstance whatever is level of success of operations...