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Variable Cost Calculator

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Our variable cost calculator helps businesses understand their expenses that change with production or sales, like materials and labor. By using this tool, companies can plan budgets, set prices, and make decisions to manage their costs effectively. It's a valuable aid for financial planning and smart business choices.

What Is Variable Cost?

“A variable cost is a cost that changes over the period of time based on the company's expenses. It is an expense that is directly dependent on the production volume”.

VC rises if the production increases and is reduced by the decrease of the production volume of a business.

Example:

There are many examples that we see in our daily life like variations in the following values:

  • Credit card fee
  • Direct labor cost 
  • Monthly groceries for the kitchen 
  • Electricity and utility bills
  • Sales commission
  • Cost of raw material 

Variable Cost Formula:

If you want to calculate the actual variable cost then there is a total variable cost formula which is as follows:

Variable Cost =  Total Cost  -  Fixed Cost

There are two things involved in the total variable cost, the first is total cost and the second one is fixed cost.

By excluding fixed costs from the total costs, you can get the actual amount of variable cost. Variable cost fluctuates with time every month whereas fixed cost remains the same over the period of time.

How To Calculate Variable Costs?

Calculating variable costs is pretty simple with the help of the variable cost formula. Let's say, a company’s total manufacturing cost is $10000 and its fixed cost is $3000 then calculate the variable cost of manufacturing.

Solution:

The variable cost formula assists you in calculating the variable cost of manufacturing.
Here’s how,

Variable Cost  =  Total Costs  -  Fixed Costs

Variable Cost  =  10000  -  3000

Variable Cost  =  7000

Here’s the result of the total variable cost is $7000 which can also be checked by our online tool total variable cost calculator.

Average Variable Cost:

The average variable cost consists of the per unit cost of manufacturing output. It is derived by dividing the total variable cost by the total output. The average variable cost is determined by the total output and fluctuates with the change in output.

Here’s the average variable cost per unit formula:

Average Variable Cost  =  Total Variable Cost / Total Output

The average variable cost calculator plays a crucial role in reducing the overall cost. You can easily calculate the average variable cost with the help of online cost-calculating tools.

How To Find Variable Costs Per Unit?

Assuming a car manufacturing company’s variable cost is $50000, and the company manufactures 100 cars, then how to calculate variable cost per unit?

Solution:

The average variable cost formula is:

Average Variable Cost  =  Total Variable Cost  /  Total Output

Average Variable Cost  =  50000  /  100

Average Variable Cost  =  $500

Working of Variable Cost Calculator:

With the help of our online total variable cost calculator, you can calculate and generate the most accurate results by giving some inputs. Here’s how?

Input:

  • Make a selection from the first list.
  • Enter the required parameters in their respective fields.
  • Tap on the Calculate Button.

Output:

  • Variable Cost.
  • Average Variable Cost Per Unit.

FAQs:

How Does Variable Cost Affect Decision-Making?

With the help of variable cost calculation, company managers make good decisions about which product is to be further continued and which is to be not.

Can Variable Costs Be Predicted?

Yes, it can be predicted to some extinct. Using total variable costs and average unit costs, you can forecast how variable costs will change as production increases, including any marketing costs associated with the increase.

References:

From the source Wikipedia: Variable cost

 
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