How to Calculate Fixed Cost Per Unit

Save
It is important to remember fixed costs are variable only on a per-unit basis.
It is important to remember fixed costs are variable only on a per-unit basis. (Image: Jupiterimages/Comstock/Getty Images)

Fixed costs are manufacturing costs that do not change with the volume of production for a company. For example, if your fixed costs are $1,000 a month, then it does not matter if you make 10 units or 1,000 units, your fixed costs remain the same. This is why fixed costs vary on a per-unit basis. Fixed costs include anything that does not change with production, such as rent or salary wages.

Determine your total fixed costs in manufacturing. Your general ledger should keep this information. If you do not have an accounting system in place, you can sort through your receipts and see which receipts occur each month for the same amount. For example, assume you calculate fixed costs of $1,000 per month.

Determine how many units you produced for the month. In the example, assume you produce 5,000 units.

Divide your fixed costs by units produced. In the example, $1,000 divided by 5,000 units equals $0.20 per unit.

Tips & Warnings

  • You do not need to perform this on a monthly basis. This calculation works over any period of time, as long as you look at fixed costs and units produced for that period of time, such as a week or year.

Related Searches

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!