👉 A cost fluid, also known as a variable cost, is a component of total costs that changes in proportion to the level of production or sales volume. Unlike fixed costs, which remain constant regardless of output (such as rent or salaries), cost fluids fluctuate based on production levels, sales volume, or other operational factors. Examples include raw materials, direct labor, and utilities consumed per unit produced. These costs are integral to understanding cost behavior and are crucial for pricing strategies, profitability analysis, and decision-making in business operations.
