Variable costs are crucial for a business since these can have a significant impact on how a company allocates its funds. Variable costs may be high in businesses that undergo frequent and major changes. These costs can differ based on the strategic goals of a business. Variable costs are an indispensable part of any company's financial decision-making process. These costs are generally more relevant and attract management involvement as against fixed costs that have already been incurred and are generally irreversible. Variable cost monitoring allows companies to make profitability comparisons across different units to get meaningful insights.