Direct labor may not be a variable cost if labor is not added to or subtracted from the production process as production volumes change. Types of Variable Costsĭirect materials are considered a variable cost. The sum total of all manufacturing overhead costs and variable costs is the total cost of products manufactured or services provided. Total quantity of units produced x Variable cost per unit = Total variable costs To calculate total variable costs, multiply the total quantity of units produced by the variable cost per unit. If production or services are increasing, then variable costs should also increase. If no production or services are provided, then there should be no variable costs.
Any suggestion for the betterment of the Exceldemy community will be highly appreciable.A variable cost is a cost that varies in relation to either production volume or the amount of services provided.
#CALCULATE TOTAL VARIABLE COST FREE#
To sum it up, the question “how to calculate Variable Cost per unit in Excel” is answered here in 4 separate steps with elaborate explanations.įor this problem, a macro-enabled workbook is attached where you can practice these methods.įeel free to ask any questions or feedback through the comment section. Which in turn will calculate the Variable Cost Per Unit or in the other words, the Average Variable Cost.īy following the above step-by-step procedure, we were able to calculate Variable Cost per unit in Excel.
#CALCULATE TOTAL VARIABLE COST HOW TO#
Read More: How to Calculate Cost per Unit in Excel (With Easy Steps) Then we calculate the Variable Cost for each month and then we will calculate the Variable Cost per unit or in other words, the Average Variable Cost by dividing the total Variable Cost by the total amount of Units.We will add the terms in the horizontal direction.We know, that the Variable Cost consists of various terms and factors like Labor Cost, Manufacturing Overhead, etc.In the beginning, we need to set up the dataset properly to calculate the Variable Cost per month.To get variable expenses per unit, we need to prepare the dataset properly, Otherwise, a poorly made dataset can produce flawed output that can lead to a misleading conclusion. The Variable Cost is Raw Materials, Labor Cost, Manufacturing Overhead, etc. In this dataset, we have all the Variable Cost breakdowns per month listed. Step-by-Step Procedure to Calculate Variable Cost Per Unit in Excelįor the demonstration purpose, we are going to use the following dataset. There are different types of Variable Costs that exist, so, normally, the Variable Cost will consist of diverse types of components. The only cost then remaining then will be the Fixed Cost. According to the graph, when the No of units Produced is zero, then the Variable Cost will zero. However, as the Variable Cost is linear, the graph will be linear as well, as shown below. In this table, we can see that the Variable Cost is now set to 50, which means whatever the item number produced, the cost of producing them would be 50. Furthermore, as the Fixed Cost won’t change with the change of unit increase, the total cost also going to be linear, as shown below. The only cost then remaining then will be the Fixed Cost.Īs the name suggests here, the Variable Cost here in the table will be linear, which means that the value of the Variable Cost will increase in proportion to the unit increase.
According to the graph, when the no of units produced is zero, then the Variable Cost will be zero. However as the Variable Cost is non-linear, the graph will be nonlinear as well, as shown below. In this table, we can see that the Variable Cost is now set to 50, which means whatever the item number of the item produced, the cost of producing them would be 50. Meaning the value of the Variable Cost of the items does not increase in proportion to the unit increase. In theory, two different types of Variable Cost curve exists.Īs the name suggests, the Variable Cost value of the items is not linear in this type of curve. Hypothetically, when the output unit becomes zero, the Variable Cost is nullified accordingly.They are also known as the Prime Costs.Variable Cost per unit produced or in other words the Average Variable Cost generally remains constant.The output of production and the Variable Cost have a positive relationship.They are normally output-dependent, meaning the value of the total Variable Cost will be entirely dependent.
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