What is the formula to determine variable cost per unit?
As a formula:VC per unit = TVC / units producedTC = TFC + TVCTC = Total costsTFC = Total Fixed costs (do not change with the level of production)TVC = Total Variable Costs (Total VC changes when the production level changes; costs per unit do not change)General ExplanationIn general the total of the variable cost per unit increases resp. decreases when the number of production units increases or decreases.This is the opposite of so-called constant, fixed or sunk costs that do NOT change when the number of production units change.Particular explanationTo give you an example:When you lease a plant (production site) the monthly lease costs do not change, whether you would produce 10,000 units or 0 units. You would still need to pay the rent.However, when you produce some item you need the material for that item.Let’s say that we have a production site for steel rivets. The level of steel varies with the number of rivets you are going to produce. No rivets, no steel, many rivets much steel.Of course, in the real world the variable costs per unit can change, for example because of a volume discount when you would buy more steel, or due to price fluctuations on the steel market.Finally , if you have the total variable costs AND you know the number of items produced, you can calculate the variable costs per unit: TVC / number of units.There are some different flavours to this formula which have in common that they add a certain level of sophistication but at the end of the day it all boils down to what I described here before.Good luck!
How do i calculate the fixed cost per unit given the following info? ACCOUNTING?
You'll get in trouble if you start calculating Fixed cost on a per unit basis, since it is only valid at that exact activity level. Add one more unit, and unit cost changes. Fixed cost at 6,600 machine hrs is still $326,040. If you must show it per unit, or per machine hr, it's $326,040 / 6,600 = $49.40 ( compared to a rate of 50.16 at 6500 level) Better to calculate Variable cost per unit, or MHR, then add fixed cost as an absolute value.
Relevant Range Accounting Calculation?
At an activity level of 10,000 units, variable costs totaled $35,000 and fixed costs totaled $20,800. If 16,000 units are produced and this activity is within the relevant range, then: A. total cost would equal $89,280. B. total unit cost would equal $4.80. C. fixed cost per unit would equal $5.58. D. total costs would equal $55,800.
How can I calculate the total cost of quantity with price breaks in Excel?
This facially easy problem is, in reality, an interesting test of compact logical thinking. But for now, the formula in B9 is:=IF(B8<11,B2,IF(B8<20,B3,IF(B8<50,B4,IF(B8<101,B5,B6))))*B8This assumes that the table of values exists at the upper left of the spreadsheet, like this:Basically, the formula does a number of tests, such that when a test is found to be true, the the formula executes. Otherwise, do the next test. And so, when we break down the formula, we see that the result is multiplied by the value in B8 (number of units). Thus, the test and actions are these:IF B8 is less than 11, then take the value in B2 times the value in B8, otherwise;IF B8 is less than 20, then take the value in B3 times the value in B8, otherwise;IF B8 is less than 50, then take the value in B4 times the value in B8, otherwise;IF B8 is less than 101, then take the value in B5 times the value in B8, otherwise;Take the value in B8 times the value in B6.The formula COULD have been written to ask if B8 was equal to or less than the last unit quantity in a bracket of values. But why bother? Just ask if it is less than the first value in the next higher bracket. Either approach would work, but use the approach that is most simple.Hope that helps.
Which of the following statements is true with respect to variable costs per unit?
A.They will decrease as production increases within the relevant range. B.They will increase as production decreases within the relevant range. C.They will remain the same as production levels change within the relevant range. D.They will decrease as production decreases within the relevant range. .
Help calculating average fixed cost?
it says the relevant range is 7500-12500 units. when 10,000 units are sold its unit costs are: direct materials $6 per unit direct labor $3.50 per unit variable manufacturing overhead $1.50 per unit fixed manufacturing overhead $4 per unit fixed selling expense $3 per unit fixed administrative expense $2 per unit sales commissions $1 per unit variable administrative expense $ .50 per unit if 12,500 units are produced, what is the average fixed manufacturing cost per unit produced? ps. i am not looking to cheat or for a quick answer, so if you could explain to me how you go about solving this that would be great. thanks in advance.
Accounting - Total Production Cost per Unit?
You keep fixed cost the same, it does not vary with production (we are told we are "within the relevant range" which means there is no capacity issues, we would not need to build a new factory or anything like that to increase production) So fixed cost = $209 620 Now, for variable costs you need to find the variable cost per machine hour under the first activity level. So variable cost per hour = 824 910 / 9 300 = $88.70 per machine hour. Now, you multiply the new activity level by this per hour rate. Therefore variable cost (under the new activity level) = 9 400 x 88.7 = $833 780 Now, I assume they mean "total production engineering cost per MACHINE HOUR" because we are not told how many machine hours it takes to produce a unit. Therefore answer = (209 620 + 833 780 ) / 9 400 = $111.00 Option D