How to create a variable for path and use it on making a new directory in powershell

I want to use a variable for the path, instead of typing it manually

Instead of this

#create a folder 
New-Item -Path 'D:\Test\New_folder' -ItemType Directory

to have something like this

$path='D:\Test'

#create a folder with a var

New-Item -Path '$path\New_folder' -ItemType Directory

But it is not working. I really appreciate any help you can provide.