Which of the following would be considered an example of a variable cost?
a. rent
b. interest payment on a loan
c. cost of raw materials
d. salary of a permanent, full-time worker

The cost of raw materials could be seen as a variable cost. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases. Variable costs differ from fixed costs such as rent, advertising, insurance and office supplies, which tend to remain the same regardless of production output.