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Variable cost per unit is 3.7
What Is a Variable Cost?
A variable cost is one whose amount varies according to how much the business produces or sells. In correlation with a company's output or sales volume, variable costs increase or decrease.. They increase when production increases and decrease when production decreases.
Variable costs are expenses like as raw material and packing prices, credit card transaction fees, and shipping charges that fluctuate with sales in the retail or manufacturing industries. You can contrast a fixed cost with a variable cost.
• A variable cost is an expense that fluctuates in relation to production output or sales. • Variable costs rise as production or sales rise, and fall as production or sales fall.
• Fixed costs, as contrast to variable costs, are unaffected by changes in production or sales volume.
The contribution margin of a product, which is the parameter used to calculate a company's break-even point or goal profit level, is heavily influenced by variable expenses.
What is the Formula and Calculation of Variable Costs?
The total variable cost is simply the quantity of output multiplied by the variable cost per unit of output:
Total Variable Cost = Total Quantity of Output X Variable Cost Per Unit of Output
Across profits, the variable cost per unit will change. It can generally be computed specifically as the total of the many forms of variable costs covered below. If variable expenses are incurred in batches, they might need to be divided among the commodities (i.e. 100 pounds of raw materials are purchased to manufacture 10,000 finished goods).
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