3 Ways to Calculate Variable Costs
Cost-Volume-Profit (CVP) analysis is a financial tool that businesses use to determine how changes in costs and sales volume can affect profits. These costs have a mix of costs tied to each unit of production and a fixed cost which will be incurred regardless of production volume. It's worth mentioning that firms may reduce the cost per unit by benefiting from Economies of Scale, which allows for decreased variable costs due to increased efficiency and bargaining power from higher volume. Since...