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hey there students so in this video today we're gonna go over variable costs there's three main types of variable costs that we should talk about these three types you'll see throughout the entire class so you have to know what these terms mean so what are variable costs well the first main type is called direct materials a second we talked about direct labor sometimes I just call it labor and third we talk about overhead or variable overhead now what is materials what does that mean so remember nor that car well anything you add to that car so imagine an engine it's a material it's tangible you can hold it that's called a direct material another example would be like a steering wheel or a tire whatever is needed to make that car you need different materials to put it together now another good example would be furniture what do you need what's a big material that you need for furniture would that's a direct material it's a direct cost that you can trace to that product so with a car once again a good example is an engine or a steering wheel or a tire or maybe even the fabric that lines the backseat right that's a material you need for the car to be put together that's the first type of variable cost second type we call this labor or direct labor it's the people that put the car together right they're an assembly line here they take all those materials right engine steering wheel glass whatever it might be to put a car together they take it and they assemble it that's called direct labor that's a variable cost now here's another one the third made tight overhead or we call it variable overhead now a good example would be electricity right so you need that factory to make those cars now to make those cars though you need electricity for the factory to run that's the idea so there's a lot of different types of overhead let's go through a few examples here now materials that's pretty straightforward labor that's straightforward but overhead can be very tricky to identify what is overhead and what is not now don't worry I have a lot of cool practice questions coming up that will help you with distinguishing between labor materials and overhead let me give you some examples here of overhead so electricity you knew that one tools so eight tools that are needed to put that car together think about a hammer or a screwdriver or power tools that's all considered overhead actually now you're probably asking why is that not a material well the car itself needs an engine steering wheel all those things for it to be put together but the thing that helps assemble it like the power tool that's not part of the car you're just using it to put the car together that's why it's overhead hopefully see that...