The amount by which total costs will change when an activity is increased by one unit. In the
equation of the line, y = a + bx, the variable cost rate is represented by 'b' and the units of
activity are indicated by 'x'.
Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. He is the sole author of all the materials on AccountingCoach.com. Read more about the author.