In the course of economic activity, company leaders spend money on certain needs. All these costs can be divided into two groups: variable and fixed. The first group includes those costs that depend on the volume of products manufactured or sold, while the latter do not change depending on the volume of production.
Instructions
Step 1
To determine variable costs, look at their purpose. For example, you purchased any material that goes into the production of products, that is, it directly takes part in the release. Let it be wood from which lumber of various sections is made. The volume of lumber produced will depend on the amount of wood purchased. Such costs are referred to as variables.
Step 2
In addition to wood, you use electricity, the amount of which also depends on the volume of production (the more you produce, the more you spend a kilowatt), for example, when working with a sawmill. Any costs you pay to the electricity supplier are also referred to as variable costs.
Step 3
To make a product, you use a labor force that needs to be paid wages. Consider these costs as variables.
Step 4
If you do not have your own production, but act as an intermediary, that is, you resell the previously purchased product, then the total cost of the purchase is attributed to variable costs.
Step 5
To determine variable costs, analyze the dynamics of the increase in all costs. As a rule, they will increase when production volumes increase, and vice versa, decrease when productivity decreases.
Step 6
To understand what variable costs mean, consider fixed costs. For example, the rent for the premises does not affect the production volumes in any way. These costs are also permanent. The salary of management personnel also does not always depend on the output of products, while a shop employee receives in proportion to the volume of manufactured products.
Step 7
In the variable costs also include social contributions for production workers; payment for fuel, water. That is, everything that affects the volumes.
