Which of the following is an example of a variable cost?

A variable cost is an expense that changes in direct proportion to the level of production or sales volume. This means that as more products are made, these costs will increase, and when production decreases, these costs will lower.

The cost of raw materials needed for production is a prime example of a variable cost because it fluctuates based on how much of the product is being manufactured. If a company produces more units of a product, it will require more raw materials, thus increasing the overall cost associated with those materials. Conversely, if production stops or decreases, the need for raw materials would also decrease, reducing the cost incurred in this area.

In contrast, the other options provided are fixed costs. Insurance costs and rent for office space remain constant regardless of the level of production. Similarly, the salary of permanent employees is usually fixed and does not change based on the company's production levels, making these options unsuitable representations of variable costs.