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Assignment Task

 

Variable costs vary with production volume. The more units you produce, the higher these costs will be. Employee's commission would be a variable cost.

After classifying all your variable costs, total them for a given time period. For instance, consider a simple manufacturing operation that has only 3 variable costs: raw materials, packaging and shipping. The sum is the total variable cost.

Divide the total variable costs by the production volume. Dividing the total variable costs for a given time period by that period's production volume will yield the unit variable cost. Unit variable cost can be calculated as v=V/Q, where v is unit variable cost, V is total variable cost, and Q is the quantity produced.

 

Unit cost estimating:

Compile all the line items (assemblies) for the job

Attach a unit cost to each line item (assembly)

Total the numbers and have them checked by a second party that knows what they are doing

Apply your markup, and you have a price. Then get back to your customer with your quotation and move on with the sale.

 

 

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  • Posted on : May 15th, 2019
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