What is the name of the cost that varies in total as the level of production or sales changes?

The name of the cost that varies in total as the level of production or sales changes is referred to as a variable expense. This type of expense is directly tied to the output of goods or services, meaning that when production increases, the total cost for these expenses also rises, and conversely, when production decreases, these costs fall as well. Examples of variable expenses include costs like raw materials, direct labor costs for production, and sales commissions. This characteristic of changing with production levels distinguishes variable expenses from fixed expenses, which remain constant regardless of production volume. Understanding variable expenses is crucial for budgeting and financial planning in any business, as it allows organizations to predict costs more accurately based on their operational activity.