Direct material is a variable cost.
A variable cost is a cost that changes in proportion to the changes in the level of output. Direct materials are the materials that are directly and physically identifiable with the finished product. They are the primary ingredients that go into the finished product. For example, the raw materials used to make a car are direct materials.
Fixed costs are costs that do not change in proportion to the changes in the level of output. Examples of fixed costs include rent, insurance, and depreciation.
Semi-variable costs are costs that have both fixed and variable components. For example, the cost of electricity may include a fixed monthly charge for the connection to the power grid and a variable charge based on the amount of electricity used.
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