[emelio]

Hi, I am new to site. I need help with understanding what "variable cost per line / case" is and how do I find these values. I am very new to building budgets so any help is greatly appreciated.

Thanks,
ER

[morgaine300]

Is this for a class or real life? I don't know specifics about buildings, but the concept of variable costs works for anything. I don't know what the "line/case" thing means. (i.e. line of what?)

You just have to look at it from the point of view of variable costs per unit, or per person for a service, or per whatever is appropriate for the business. So for example, let's say it's a manufacturer of shoes. Then we'd have variable costs per pair of shoes. Those would be the costs that are incurred each time a pair of shoes is made, and is dependent upon production. If your costs are $5 per pair... if you make zero, your costs are zero. If you make one pair, you have $5. Two pairs, you have $10. 1000 pairs, you have $5000. i.e. you incur this cost for each pair of shoes. So these would be things like the materials going into the shoes, the labor of the people on the assembly line, etc. It can also be selling & administrative costs, not just production costs. So the commission of sales people would be variable.

Versus fixed costs, which are those that you will incur regardless of the number of shoes, because they are fixed per month or per year. Like rent, the president's salary, depreciation on a machine, the janitor, etc.

There are also mixed costs, which have an element of both. Like that sales person. What if they get a fixed based salary plus commission... that's a mixed cost incorporating both fixed and variable.