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

    sales journal formatannual equivalent rate calculatorsmall business excel templates bookkeepingequation for cogsdividend debit or creditgross profit journal entryaccounting basics cheat sheetcash conversion ratio formulaa post closing trial balance will showhistorical accounting conceptfob destination vs fob origincapital account journal entryaccrual journal entrywhere do you put accumulated depreciation on a balance sheetcurrent ratio versus quick ratiocalculating bad debt expenseunamortized discount on bonds payabledefinition of absorption costingnet present value annuity calculatordebtor turnover days formulasample cashbookactivity based costingstemporary accounts in accountingdepreciation reducing balancecost of finished goods manufactured formulameaning of bookkeepingpv formulasdefinition of accrued expensesprepayments in balance sheetnpv excelcalculate ending inventoryimprest petty cash templateeft accountinggeneral entries of accounts payabledecreasing perpetuity200 db depreciationhorizontal analysis of a balance sheetfixed assets turnover ratio exampleaccounting for debt factoringhow to journalize freight chargescalculating days sales outstandingsales margin formula excelcalculate present value annuityadjusting entry unearned revenueaccounting solverreturn on equity dupontcash count definitionannuity fv calculatorrevenue expenditures and capital expendituresthe formula for depreciable cost iswages debit or creditgross profit vs markupexcel formula for npvdeferred tax calculation spreadsheetbookkeeping on excel spreadsheetspayment voucher word formatvalue of a perpetuity formulahow to calculate pmt in financewhat are prepayments in accountingweekly bookkeeping recordis unearned revenue on the income statementpv annuity due tableunearned income liabilityfinance lease vs capital leasefuture value and present value formulasfixed overhead variancescalculating dividends from balance sheetcontra account examplefuture value of annuity tableliquidity acid testaccounts receivable debit creditfifo equivalent units of productionhow to calculate total variable cost per unitbond amortization schedule