Variable cost is a cost that increases in total as output increases and decreases in total as output decreases.

For example, if you are producing necklaces and each necklace that you make costs you an additional $10, this is your variable cost. So your cost for producing X amount of necklaces would be $10X. This is assuming that there are no fixed or other such costs.

Variable costs will typically be compromised of your materials and labor needed to make an additional product. There are of course other factors that can be associated with variable cost such as extra utility usage (on a pay per use rate) or something of that nature.