Variable cost is an expense that changes based on how much you produce or  use.

For instance, if a bakery makes more cakes, the costs for flour, sugar, and  packaging go up. These are variable costs.

How to Understand :  

It’s a cost that gets higher when you make more and lower when you make less.

Importance :

Variable costs help businesses figure out their profits.

They are useful when deciding how to price products.

Understanding variable costs is important for budgeting and managing expenses.  They help in understanding break-even points, which is when a business starts to  make a  profit.