5/18/2023 0 Comments Variable cost per unit calculator![]() ![]() These are the costs that shall change depending upon the output. Therefore, the selling price would be $18.67. Now, if it considers covering all the variable costs and wants to earn a 25% profit on selling price, it wants to earn 33.33% on cost. In this example, the variable cost per piece is the cost of bread, which is $1, then material cost, which is $5, and vegetable cost, which is $8 per piece, and hence the total variable cost per unit is $14 per piece. If he produces 100 hotdogs, you are required to compute the total variable cost and the selling price that he should keep covering the variable cost, and for the time being, he avoids fixed cost calculation. He wants to make a 25% profit on the selling price. The vegetable cost, on average, is $8 per piece. On average, he requires sauce, butter, and other stuff, which costs him around $5 per piece. Further, he notices that the cost of a vehicle is fixed, which is not changing and is $40,000. He notices that the cost of bread increases whenever there is a demand for hotdogs, and he noted that per piece, he has to pay $1. He is interested to know what the cost is that is rising with the number of hotdogs that he sells. Bean sells hotdogs in the street in his vehicle. Therefore, the total variable cost in producing all the three products will be 880,000 + 11,48,000 + 38,85,000 which is equal to 59,13,000.įurther we are given that total fixed cost is 15,00,000 and therefore the total cost will be 59,13,000 + 15,00,000 which is 74,13,000. To come up with a total cost of production, we need first to compute the total variable cost per product and then sum up those with a total fixed cost, which shall give us a total cost of production.Ĭalculation of Total numbers of goods produced Here, the company produces three products: Lux, Clinic Plus, and Fair & lovely. You can assume that there was no opening inventory. ![]() Particularsīased on the above information, you are required to calculate the total variable cost and total cost of production. Below is the statement extracted from its latest stock statement, submitted to the bank. It first wants to compute the total cost of production of its three major products, which include Lux, Clinic Plus, and Fair and lovely. Now it is considering repricing products to survive the competition. Recently it was hit by the competition in the market. Their examples include toothpaste, ready-to-make food, soap, cookie, notebook, chocolate, etc. It is one of the largest FMCG FMCG Fast-moving consumer goods (FMCG) are non-durable consumer goods that sell like hotcakes as they usually come with a low price and high usability. HUL produces many different types of products and is a large company. In the above example we calculated contribution per unit by subtracting variable cost per unit from selling price per unit.Ĭontribution per unit is a really useful number to have.Therefore, the calculation will be as follows Total profit = contribution less fixed costs If we take these away from the contribution (£180,000), then we can calculate the overall profit or loss of the business: The total fixed costs of the business are £116,000. Imagine that, in the example above, the business has the following fixed costs: Why? This is because we have not yet taken account of the fixed costs of the business. Note that the total contribution of £180,000 is not the total profit made by the business.
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