Variable Cost Calculator

The variable cost calculator estimates the total variable cost sustained by a company minus the fixed cost.

Entrepreneurs can determine what is the break-even point and when to invest more in business by knowing the average variable cost (AVG).

What Is Variable Cost?

“Variable cost is a production cost that goes to increase or decrease depending on the company’s manufacturing capability”

Example: 

Examples of variable costs are human labor, electricity cost, production, or manufacturing cost, and inventory cost.

Variable Cost Formula:

Calculating variable cost is simple by the variable cost formula

Variable Cost = Total Cost – Fixed Cost

Where

Total Cost = Total Cost Sustain

Fixed Cost = Fixed Expense Bear 

The variable cost may be different in different months, but the fixed cost remains the same like the rental payment, insurance, or the interest payment. Total variable cost is essential to estimate as it goes to change over a period of time. 

How to Find Variable Costs?

Consider the variable cost of manufacturing is $500 and the fixed cost is $400. Then calculate the variable cost of manufacturing.

Solution:

The variable cost formula assists us to find the variable cost.

 Variable Cost  = Total Cost – Fixed Cost

Variable Cost  = 500 – 400

Variable Cost  = 100

The total variable cost of the manufacturing unit is $100. An entrepreneur needs to control the variable cost as fixed cost is controllable as compared to variable cost.

Average Variable Cost:

Average variable cost is an expense or the cost per unit variable input used to produce a unit product or a service. The Average variable cost goes to change by the number of units produced. By mass production, the average variable cost turns to decrease, as the average variable cost declines as the output level increases. 

The Average variable cost is one of the necessary elements to determine to reduce overall cost. To reduce the unit cost, it is better to use the online average variable cost calculator.

The average variable cost per unit formula is:

\(AvgCost_{Variable} = \dfrac{Cost_{variable}}{Output_{total}}\)

How to Find Variable Costs Per Unit?

Consider a mobile company producing mobile devices for which the variable cost is $5000 and the company is producing 10 units. Then what is the average variable cost per unit?

Solution

The average variable cost equation is:

\(AvgCost_{Variable} = \dfrac{Cost_{variable}}{Output_{total}}\) 

\(AvgCost_{Variable} = \dfrac{5000}{10}\)  

\(AvgCost_{Variable} = 500\) 

If you are curious about how to calculate variable expenses to manage manufacturing expenses, then it is an efficient way to find variable costs by the total variable cost calculator. Controlling the average variable cost per unit goes to decrease with mass production. Businesses do want to increase their production as same unit mass production decreases the average total variable cost of the production.

Working of Variable Cost Calculator:

Using our calculator is quite straightforward as it requires a couple of inputs to generate accurate results. Let’s find out how! 

Input:

• Make your selection from the first list
• Enter the required parameters in their respective fields
• Tap Calculate

Output: 

• Variable cost
• Average variable cost per unit

FAQs:

What Are 4 Major Variable Costs?

The 4 major variable costs are: 

1. Raw materials costs 
2. Production costs 
3. Delivery costs
4. Labor tariffs

The total variable cost is the sum of 4 variable costs as these costs are not fixed

Is Variable Cost the Total Cost?

No, the total cost is the sum of the total fixed and variable costs. You can control the variable cost by increasing the production of the units or by managing expenses with the average variable cost calculator.

Is Depreciation a Variable Cost?

Depreciation is a fixed cost as it is going to vary with the passage of time and we consider it a fixed cost as it is still changing. You need to calculate the variable costs and total costs to manage the depreciation expense.

References:

From the source of Investopedia: Variable Cost, How to Find Variable Cost Per Unit? 

From the source of Wikipedia: Average Cost, How to Calculate Variable Cost?