Variable cost is a corporate expense that changes in proportion to production output. It changes with an increase or decrease in the amount of goods or services produced or sold.
Examples of variable costs include the costs of raw materials and packaging.
Variable cost per unit is the production cost for each unit produced.
Formula to calculate variable cost per unit.
Variable cost per unit is calculated by dividing the total variable cost by the number of units.
Calculate the variable cost per unit of 5 coaches whose total variable cost is Sh. 129,000.
Therefore, the variable cost per unit is Sh. 25,800.