How to find variable costs

To the variable costs of the enterprise include costs that change when the volume of production. They are characterized by the fact that they disappear when production stops. How to determine their size?

You will need

• - calculator;

• - a computer.

Instruction manual

1

Calculate the cost of materials for the production of one product. To do this, it is necessary to multiply the price per 1 kg of materials used in the manufacture of products, the mass of the product and the utilization of the material. The coefficient of use of the material is equal to the ratio of the mass of the product to the rate of consumption of material for the manufacture of products. The resulting value is multiplied by the rate of transport and procurement costs divided by 100 plus one. All these indicators are taken from the accounting reports for the enterprise. Calculate the total cost of materials for production for the billing period.

2

Calculate the cost of labor of production workers. Calculate the rate for each operation for each employee. To do this, multiply the employee’s hourly rate by the time the work is performed for production. Summarize all the values ​​obtained, add the premiums paid to them and receive the labor costs of production workers.

3

Calculate the deductions for the social needs of the employees of the enterprise. This indicator is equal to the cost of wages of workers multiplied by the rate of deductions for social needs. The deduction rate is established by law. Since this indicator is expressed as a percentage, the obtained value after multiplication must be divided by 100.

4

Summarize the business expenses spent by the enterprise on production. It is necessary to take into account the costs of electricity, fuel and water based on actual consumption and acquisition cost. Add to the commercial expenses also the costs of packaging products and transportation and procurement costs.

5

Summarize all the indicators obtained and get the variable costs of the enterprise for manufactured products for the reporting period. Divide the obtained value by the number of products manufactured during this period. As a result, get variable costs per unit of output.