How do you calculate variable unit costs and total annual costs?
Ans) Annual units sold, 1000. Raw materials yearly cost 650. Building rent yearly cost 9000. If sales volume enhanced to 6000 units and 8000 units, what is the total year cost and unit cost for fixed variable?
Cost per unit of raw material=650/1000= 0.65
Fixed cost (Rent) =9000
Fixed cost per unit= 9000/1000= 9.00
If the sales volume enhances to 6000 units, then total cost= 12900 and cost per unit = 2.150
Variable cost+ fixed cost= (0.65*6000) + 9000= 12900 / 6000= 2.15
If the sales volume enhances to 8000 units, then total cost= 14200 and cost per unit = 1.775
(0.65*8000) + 9000= 14200 / 8000 = 1.775