How to Calculate Variable Cost per Unit

Variable Cost per Unit

A business has costs which are classified as shown below.

  1. Direct Labor 40,000 – variable
  2. Utilities 22,000 – 80% variable
  3. Materials 35,000 – variable

Total Variable Costs

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

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

Variable Cost per Unit

If the number of units produced in the period is 1,000 then the variable cost per unit is calculated as follows.

Variable cost/unit = Variable cost / Number of units
Variable cost/unit = 92,600 / 1,000
Variable cost/unit = 92.60

Expected Variable Costs

If in the next period the number of units produced is expected to be 1,200 then the expected variable cost is calculated as follows.

Variable cost = Units x Variable cost per unit
Variable cost = 1,200 x 92.60
Variable cost = 111,120

The unit variable cost remains at 92.60 but the total variable cost is expected to rise form 92,600 to 111,120

Find more Questions and Answers

Random questions and answers for you to discover.

    How to Calculate Variable Cost per Unit March 21st, 2017Team

    You May Also Like


    Related pages


    bad debt expense on income statementexcel present value calculatorhow to compute gross profitfob shipping point inventoryledger proformafixed asset register examplenpv calculator excela common size income statementfixed asset turnover rationaccrued and prepaid expensesbookkeeping sheetspoc revenue recognitionaccounting journal and ledgerthe journal entry for recording an operating lease payment wouldadjusting journal entries examplestock valuation spreadsheetjournal entry worksheetaccounting for goodwill journal entrieslong term debt to equity ratio calculatoraccounting shrinkagefinancial accounting trial balancehow to calculate cost of goods sold from balance sheetaccounting equation transactions worksheethow is roce calculatednormal balance debit or creditmarkup calculator percentdefinition of zero based budgetingcomputing gross profitfreight prepaid and addmonthly debtor days calculation formulaformula for dso calculationjournal entry for sale of assetaccrual versus cashhow to compute for effective interest rateexamples of cogsaccounting bank reconciliation templateaccounting cycle 8 stepsformat of consignment accountpresent value in perpetuityperiodic interest rate formulat accounts excel templatecontra account listlifo reserveadjusting entries affect onlymarketable securities on cash flow statementcogmrule of 78 amortization scheduledepreciation of fixed assets definitiondeclining depreciation methoddouble entry bookkeeping books free downloadincome statement bad debt expensepv of cash flows excelpurchased intangible assetsunearned rental revenue ishow do you calculate cost of goods manufactureddefine chequeprepare a multiple-step income statementhow to calculate bonds payabledeferred tax reversalvariable cost definition in accountingentries for direct labor and factory overheaddefine cushionsadjusting entries for accrued salariesexcel accounting system templatecash flow to creditors calculatorhow to calculate amortization expenselabor variance formulafuture value calcaccounting chart of accounts numbering systemloan repayment excel formulaadjusting entries practice problemsbad debt expense methodspayback period online calculatorjournal entry for reimbursement of expensehow to calculate markup percentgearing ratio interpretationpva factorhow to calculate the contribution margin ratioformula for gearingannuity payments calculator