A variable cost changes with the quantity of output or the level of activity. Raw materials, production labour-hours, packaging, and the electricity to run machines all scale with how many units the business produces. Make twice as many widgets, pay roughly twice as much for materials.
Variable costs contrast with fixed costs, which don’t depend on output (insurance, leases, salaries of permanent admin staff). The split is the basis of break-even analysis: total cost is , where the variable part usually grows roughly linearly with output , so for some per-unit variable cost .
The per-unit form is what you compare to the selling price per unit. The gap (selling price minus per-unit variable cost) is the contribution margin: how much each additional unit puts toward covering fixed costs and then profit.
“Linear in ” is an approximation that breaks at the extremes. Buying materials in larger lots gets you bulk discounts, so is actually a bit concave. Past full capacity, overtime wages and rushed-shipping fees make it a bit convex. For break-even calculations the linear approximation is almost always fine.