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    ktdanielson's Avatar
    ktdanielson Posts: 16, Reputation: 1
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    #1

    May 15, 2010, 08:18 AM
    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?
    shazydotcom's Avatar
    shazydotcom Posts: 23, Reputation: 1
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    #2

    May 15, 2010, 11:05 PM

    Can you write the complete question please?
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #3

    May 16, 2010, 04:49 AM
    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 =
    ktdanielson's Avatar
    ktdanielson Posts: 16, Reputation: 1
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    #4

    May 16, 2010, 06:29 AM

    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?
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #5

    May 16, 2010, 08:02 AM
    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!
    ktdanielson's Avatar
    ktdanielson Posts: 16, Reputation: 1
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    #6

    May 16, 2010, 08:26 AM
    Gracias!:):)
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #7

    May 16, 2010, 08:44 AM
    Happy to help, KT.
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