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-   -   Finding the variable cost per unit with multiple products (https://www.askmehelpdesk.com/showthread.php?t=470911)

  • May 15, 2010, 08:18 AM
    ktdanielson
    finding the variable cost per unit with multiple products
    Estimate of variable cost per unit with one product aver cost per unit is $234 at a volume of 1200 units and another with aver cost per unit $205 at a volume of 1400. The profit was $24,000 on the lower volume. How do I calculate for the variable cost per unit?
  • May 15, 2010, 11:05 PM
    shazydotcom

    Can you write the complete question please?
  • May 16, 2010, 04:49 AM
    ArcSine
    Determine your total cost at both volume levels, which is the volume (in units) multiplied by the average unit cost.

    How much did total cost increase as a result of producing 200 more units? I think you can take it from here, remembering that

    Unit variable cost =
  • May 16, 2010, 06:29 AM
    ktdanielson

    I don't know where to go after that. Do I need to use the CVP analysis in units to attain the profit of $24,000 or does that not apply in this calculation of the estimated variable cost per unit?
  • May 16, 2010, 08:02 AM
    ArcSine
    There really isn't much further to go... the formula I gave answers the question of finding the unit variable cost. You just plug in the numerator and denominator.

    The profit figure was just a smokescreen... and as you're surmising, it isn't needed here. Which pieces of the puzzle you need in any particular question depend on which other pieces have been provided.

    Cheers!
  • May 16, 2010, 08:26 AM
    ktdanielson
    Gracias!:):)
  • May 16, 2010, 08:44 AM
    ArcSine
    Happy to help, KT.

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