You can calculate the unit costs of production by dividing the total amount of your fixed and variable costs by the total number of units you produced.
To figure your total manufacturing cost per unit, divide your total costs by the total number of units produced. For example, say for the year your company made 1 million units and incurred production costs of $3 million. Divide your $3 million costs by the 1 million units to find your cost per unit: $3.  Calculate Unit Costs. You can calculate the unit costs of production by dividing the total amount of your fixed and variable costs by the total number of units you produced. For example, say your total fixed costs are $30,000, your variable costs are $50,000 and you produced 40,000 units. The total production costs are the $30,000 fixed costs added to the $50,000 variable costs for a total of $80,000. Divide 40,000 units by $80,000 to get your $2 per unit production costs. Breakeven Analysis. When you calculate the unit costs of production, you are calculating the breakeven point, or minimum price, you must sell each unit at to make a profit. For example, say you produce 2,000 units costing $3 per unit that you resell at $5 per unit. Your profit is $5 minus $3, or $2 a unit. (Total fixed costs + Total variable costs) / Total units produced. The cost per unit should decline as the number of units produced increases, primarily because the total fixed costs will be spread over a larger number of units (subject to the step costing issue noted above). Thus, the cost per unit is not constant. For example, ABC Company has total variable costs of $50,000 and total fixed costs of $30,000 in May, which it incurred while producing 10,000 widgets. The cost per unit is: ($30,000 Fixed costs + $50,000 variable costs) / 10,000 units = $8 cost per unit.  For example, if the business above produced 500,000 units of its product that year, its unit variable cost is (155,000 / 500,000) or $0.31. 1  The unit variable cost is simply the variable cost per unit produced. 2  It is the extra cost incurred by producing each additional unit.  For example, if variable costs per unit of a product are $55 and the product sells for $100, the variable cost ratio is 55%. The difference between the selling price and variable costs is known as contribution margin (CM); this amount is the contribution toward meeting fixed costs.  Suppose a firm sells widgets for $40. The variable cost per unit equals $15. Fixed costs are equal to $700,000 for a year. Subtract the variable cost per unit of $15 from the $40 price, leaving $25. Divide fixed costs by $25 and you have a breakeven sales volume of 28,000 units. The formula for calculating unit variable costs is total variable expenses divided by the number of units. Suppose a company produces 50,000 widgets in a year. Variable expenditures might consist of: 1  Raw materials..........$350,000. 2  Production labor......$250,000. The total variable cost is 40,000 + 22,000 x 80% + 35,000 = 92,600. If the number of units produced in the period is 1,000 the the variable cost per unit is 92,600 / 1,000 = 92.60 per unit. If in the next period the number of units produced is expected to be 1,200 then the variable costs will be 1,200 x 92.60 = 111,120. A business has costs which are classified as shown below, calculate the variable cost per unit if the number of units produced is 1,000. Direct Labor 40,000 – variable. Utilities 22,000 – 80% variable. Materials 35 3. Divide the total fixed costs by the quantity of units produced in order to get the average fixed cost. For example, if your fixed cost amount totals $10,000 and you produce 1000 units, then your AFC will be $10. Calculate the average variable cost (AVC) by dividing the total variable costs by the number of units produced. For example, if the total variable cost is $400 when 200 units are produced, then the AVC would be $2.
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how to calculate price charged per unit given units sold, fixed cost and variable cost per unit