To create a composite variant:
In Inventory, select the product you need to add a composite variant to. Then, select 'Add a Composite Variant'.
Create the Variant as you normally would and save.
You will then be taken to the "Composition" tab.
Click +Add Variant and search for a component.
Select a variant to add you can then adjust the quantity & click "Add".
You can edit a composite variant after creating it.
When you're done you can just click "Save & Close".