Question

when output volume increases, do variable costs per unit increase, decrease, or stay the same within the relevant range of activity? explain

Answer 1

Variable expenses will rise along with increased production and output.

Understanding Variable expenses

Any business's overall expenses are made up of both variable and fixed costs. Sales or production output determine variable costs. Per unit produced, the variable cost of production is a fixed sum. .

Sales commissions, direct labor costs, the price of raw materials used in production, and utility prices are a few examples of variable costs.

Since they can be readily altered, variable expenses are typically seen as short-term costs.

Calculation and Formula for Variable Costs

The output quantity multiplied by the variable cost per unit of output yields the total variable cost:

Total Variable Cost is equal to the sum of the output's units' variable costs.

Across profits, the variable cost per unit will change. It can generally be computed specifically as the total of the many forms of variable costs covered below. If variable expenses are incurred in batches, they might need to be divided among the commodities (i.e. 100 pounds of raw materials are purchased to manufacture 10,000 finished goods).

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