How To Find Variable Cost Per Unit

Variable Cost per Unit

A concern has costs which are classified as shown below.

Direct Labor twoscore,000 – variable
Utilities 22,000 – 80% variable
Materials 35,000 – variable

Full Variable Costs

The total variable costs of the business are calculated as follows.

Variable cost = Direct labor + fourscore% Utilities + Materials Variable price = 40,00 + 80% 10 22,000 + 35,000 Variable cost = 92,600

Variable Cost per Unit

The variable price per unit is calculated by dividing the full variable costs of the business organisation by the number of units.

If the number of units produced in the catamenia is one,000 then the variable cost per unit is calculated as follows.

Variable cost/unit of measurement = Variable toll / Number of units Variable cost/unit = 92,600 / ane,000 Variable toll/unit = 92.lx

Expected Variable Costs

If in the next flow the number of units produced is expected to be 1,200 and so the expected variable cost is calculated equally follows.

Variable toll = Units x Variable cost per unit Variable price = one,200 ten 92.60 Variable cost = 111,120

The unit variable toll remains at 92.sixty merely the total variable cost is expected to ascension form 92,600 to 111,120.

Near the Author

Chartered auditor Michael Dark-brown is the founder and CEO of Double Entry Bookkeeping. He has worked equally an accountant and consultant for more than 25 years and has congenital fiscal models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run modest businesses of his own. He has been a manager and an auditor with Deloitte, a large 4 accountancy firm, and holds a degree from Loughborough Academy.

December iv, 2019