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The first inventory model of substitutable item was studied by McGillivray and Silver (1978) by considering that all of the substitutable items have the same unit variable cost and shortage penalty.
CVP analysis is based on the assumption of a linear total cost function (constant unit variable cost and constant fixed costs) and so is an application of marginal costing principles.
The unit variable cost is simply the variable cost per unit produced.
For example, if the business above produced 500,000 units of its product that year, its unit variable cost is (155,000 / 500,000) or $0.31.
Dividing the total variable costs for a given time period by that period's production volume will yield the unit variable cost.
Similar(55)
Therefore, the unit variable costs to make a single kite is: $50 $200 in materials and $30 in labor).
Planned production is 1,000 units, selling price $1 per unit, variable costs of manufacturing 35¢ a unit, and variable selling, general, and administrative costs 5¢ a unit.
Say a firm sells 100,000 widgets each year at $2 a widget, and producing those widgets costs $100,000 $50,000 in fixed costs and 50 cents in unit variable costs.
If it doubles the number of widgets sold to 200,000, profit per unit will rise to $1.25 (assuming that unit variable costs remain the same).
Intervention costs for a target of 1000 pregnant women receiving IPTp-SP at the ANC was equal to the unit fixed costs component multiplied by 2000 (2 doses*1000 women) plus the unit variable costs component multiplied by the actual number of doses delivered.
They consist of differences in unit variable costs plus differences in directly attributable fixed costs.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com