Variable costs are items such as:
Overtime wages – These wages will be required when additional work is required in the control of inventory. The biggest overtime wages are usually associated with inventory counts, particularly end of year or annual counts; and
Running costs for equipment:
- Fuel – to operate fork lift trucks etc;
- Tyres – for pallet and fork lift trucks; and
- Maintenance – of all equipment associated with the storage and control of inventory.
All of these costs vary in line with the level of activity.