In this example, since the total cost of production is $1/unit at any level, all costs are variable and fixed costs = 0.
Yes fixed cost varies between units as total overall fixed cost amount remains same but increase in number of units change the per unit fixed cost for example fixed cost of 10 will be 10 per unit in case of 1 unit produce and fixed cost per unit will be 1 in case of 10 units produced.
Directly variable cost means that which cost is directly related with the number of production of units of products. Example: For example if material amounting 10 is required to produce 1 product unit then total material amount of 100 will be required to produce 10 units of product in this case 10 is the variable cost per unit and 100 is the variable cost for 10 units of product.
Unit Cost: It is the cost utilized to manufacture one unit of product Total Cost: It is the cost utilized to manufacture specific volume/ number of units of product Example: 10000 cost spent on production of 1000 units of product so 10000 is a total cost & 10000/1000 = 10 is a unit cost
Labor cost is variable cost because labor is paid for every single unit of product is made. For example if labor cost for making 1 unit is 10 then making 10 units will be 100 so as much as production level changing labor cost changing that;s why it is variable cost.
The cost of the merchandise sold is not important!!! :p
Yes fixed cost varies between units as total overall fixed cost amount remains same but increase in number of units change the per unit fixed cost for example fixed cost of 10 will be 10 per unit in case of 1 unit produce and fixed cost per unit will be 1 in case of 10 units produced.
60000 is fixed cost variable cost is 10 per unit sales is 25 per unit so contribution = selling price - variable cost 25 - 10 = 15 break even point (in units) = fixed cost/ contribution = 60000/ 15 = 4000 units.
Variable cost is the cost which varies as variation in production units For example if 10 units produce variable cost = 100 if 100 units produce variable cost =1000 so per unit variable cost = 10
Fixed Expenses:These are those expenses which don't change with change of production rate and remain fixed up to certain measurement base criteria. For Example: if machine can produce 1000 units and have a operating cost of $1000 per month then it will remain $1000 from 0 - 1000 units range no matter we produce how much units in this range so this $ 1000 is fixed expanse for operating this machine.Variable Expenses:These are those expenses which change with the change of units of products but remain fixed relative to units of product. For example if 1 unit requires $ 10 to produce and we produce 10 units then variable cost will be $100 and if we produce 100 units it will goes to $1000. So it is changing according to quantity of units but remain fixed relative to 1 unit of product which is $10 per unit.
Well, you first have to look at fixed and variable costs in total as well as on a per unit basis. Fixed costs remain the constant (or fixed) in total. However, on a per unit basis they aren't constant (variable). As units produced increase (or whatever activity base) then the fixed cost per unit decreases. Fixed example: If rent is $8,000, then the total rent will still be $8,000 every month whether or not the company makes 100 products during the period or 1,000. However, using the 100 and 1,000 units as an example, the per unit cost decreases. When the company makes 100 units, the fixed cost per unit is $80 ($8,000/100 units). When the company makes 1,000 units, the fixed cost per unit is $8 ($8,000/1,000 units). The opposite applies for variable costs. Variable costs, by their nature, change with the change in units produced (or again, any other activity base the company uses, such as machine hours or labor hours). Therefore, there will be a different total for 100 units produced and 1,000 units produced. However, the unit cost never changes. Variable example: If a product that a company produces requires a certain part, this is a variable cost. Let's say the cost of the part is $10. The total variable cost for 100 units is $1,000 ($10*100 units), and for 1,000 units it's $10,000 ($10*1,000 units). However, in each case, the variable cost per unit remained at $10. Hope this is what you were looking for!
Well, you first have to look at fixed and variable costs in total as well as on a per unit basis. Fixed costs remain the constant (or fixed) in total. However, on a per unit basis they aren't constant (variable). As units produced increase (or whatever activity base) then the fixed cost per unit decreases. Fixed example: If rent is $8,000, then the total rent will still be $8,000 every month whether or not the company makes 100 products during the period or 1,000. However, using the 100 and 1,000 units as an example, the per unit cost decreases. When the company makes 100 units, the fixed cost per unit is $80 ($8,000/100 units). When the company makes 1,000 units, the fixed cost per unit is $8 ($8,000/1,000 units). The opposite applies for variable costs. Variable costs, by their nature, change with the change in units produced (or again, any other activity base the company uses, such as machine hours or labor hours). Therefore, there will be a different total for 100 units produced and 1,000 units produced. However, the unit cost never changes. Variable example: If a product that a company produces requires a certain part, this is a variable cost. Let's say the cost of the part is $10. The total variable cost for 100 units is $1,000 ($10*100 units), and for 1,000 units it's $10,000 ($10*1,000 units). However, in each case, the variable cost per unit remained at $10. Hope this is what you were looking for!
A fixed cost is one that will not change in total due to changes in production volume. An example would be factory rent. No matter how many widgets are produced in that factory, total rent is going to be the same. However, this means that the "per unit" cost changes based on how many widgets are produced. Variable costs, on the other hand, have a fixed per unit price, but total costs change in response to a change in volume. For example, let's say each widget requires $10 of direct labor to produce. Total variable costs is going to change based on how many widgets are produced.
Well, you first have to look at fixed and variable costs in total as well as on a per unit basis. Fixed costs remain the constant (or fixed) in total. However, on a per unit basis they aren't constant (variable). As units produced increase (or whatever activity base) then the fixed cost per unit decreases. Fixed example: If rent is $8,000, then the total rent will still be $8,000 every month whether or not the company makes 100 products during the period or 1,000. However, using the 100 and 1,000 units as an example, the per unit cost decreases. When the company makes 100 units, the fixed cost per unit is $80 ($8,000/100 units). When the company makes 1,000 units, the fixed cost per unit is $8 ($8,000/1,000 units). The opposite applies for variable costs. Variable costs, by their nature, change with the change in units produced (or again, any other activity base the company uses, such as machine hours or labor hours). Therefore, there will be a different total for 100 units produced and 1,000 units produced. However, the unit cost never changes. Variable example: If a product that a company produces requires a certain part, this is a variable cost. Let's say the cost of the part is $10. The total variable cost for 100 units is $1,000 ($10*100 units), and for 1,000 units it's $10,000 ($10*1,000 units). However, in each case, the variable cost per unit remained at $10. Hope this is what you were looking for!
Total variable cost has a direct relationship with the level of output or units produced so it changes according to the change in the production units or level of production.For example:Variable cost per unit = 10so if units produced = 10then variable cost = 10 * 10 = 100if units produced = 8variable cost = 10 * 8 = 80
Directly variable cost means that which cost is directly related with the number of production of units of products. Example: For example if material amounting 10 is required to produce 1 product unit then total material amount of 100 will be required to produce 10 units of product in this case 10 is the variable cost per unit and 100 is the variable cost for 10 units of product.
You can do it and now the cost turns from Fixed cost to a variable cost. You only pay for how much you produce. Earlier, if you had a machine costing 10000 and a you decided to deprecate it 10% over 10 years (straight line), your annual fixed cost is 1000. If you produce 100 items, the fixed cost per unit it 10. if you produce 1000 item, the FC per unit is 1. Now, if you outsource at a cost of 5 per unit the cost per unit will be same irrespective of how many units you produce. You make the decision based on your expected production and many other factors.
Selling price = 10 Variable cost = 8 Contribution = 2 per unit