How To Calculate Variable Costs

Table of contents:

How To Calculate Variable Costs
How To Calculate Variable Costs

Video: How To Calculate Variable Costs

Video: How To Calculate Variable Costs
Video: How to Calculate Variable Costs? [Quick and Easy] 2024, March
Anonim

Variable costs are defined as costs, the amount of which changes depending on the volume of production. Variable costs include the cost of raw materials, materials and components, salaries of production personnel, travel expenses, bonuses, fuel, water and electricity costs. The purpose of accounting for variable costs is to save them. The amount of variable costs that falls on a unit of product is practically constant for different volumes of production.

How to calculate variable costs
How to calculate variable costs

It is necessary

  • - Data on the volume of manufactured products in natural units
  • - Accounting data on the costs of materials and components, equipment for wages, fuel and energy resources for the period.

Instructions

Step 1

Based on the documents on the write-off of raw materials and materials, acts on the performance of production work or services performed by auxiliary units or third-party organizations, determine the amount of material costs for the production of products or services for the period. Exclude the amount of returnable waste from material costs.

Step 2

Determine the amount of labor costs, which consists of piecework and time wages of basic production workers and maintenance personnel, bonuses, allowances and surcharges, contributions to social insurance funds.

Step 3

Determine the amount of costs for electricity, water and fuel used for technological needs, based on the data of actual consumption and purchase price.

Step 4

Determine the amount of transportation and procurement costs and the cost of packaging products.

Step 5

Adding all the above amounts, you will determine the total variable costs for all products produced for the period. Knowing the number of items produced, by dividing, find the sum of the variable costs per unit of output. Calculate the critical level of variable costs per unit of production using the formula P – PZ / V, where P is the price of production, PZ is fixed costs, V is the volume of products produced in natural units.

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