Variable Cost Per Unit
Variable Cost Per Unit
According to costing term there are two type of cost
Fixed Cost
Variable cost
Variable cost is a cost that vary according to production of units. Variable cost per unit refers to the cost of production of each unit. If production is low variable cost will be low if higher units production variable will be higher.
Example
If variable cost per unit is Rs.or $ 10 per unit
than Cost of 100 units will be Rs or $ 1000
Formula for Variable cost Calculation
Variable cost per unit = Total variable cost/ Total production units
Example
India ltd company purchase raw material Rs or $ 10,00,000
and labour cost is Rs or $ 2,00,000
India ltd produce 50000 units from such ram material
Total variable cost:
Ram material cost Rs. or $10,00,000
Add: Labour cost Rs or $ 2,00,000
Total variable cost Rs or $ 12,00,000
Variable cost per unit = 12,00,000/50000 units
Variable cost per unit is Rs or $ 24