In our daily calculation and management work, we need to evaluate the **Variable Cost** of various components. If you are curious to know how you can calculate the **Variable Cost **Â per unit in Excel. This article may come in handy for you. In this article, we are going to show how you can calculate the **Variable Cost **per unit in Excel with detailed explanations.

**Table of Contents**hide

## Download Practice Workbook

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## Overview of Variable Cost

**Definition**

**Variable Cost per unit denotes the per unit cost needed for the labor, raw material, and other resources needed, which fluctuate as the unit produce changes.**

**General Formula**

**Characteristics of Variable Cost **

- They are normally output-dependent, meaning the value of the total
**Variable Cost**willÂ be entirely dependent. Only on the**No of Units Produced**. - The output of production and the
**Variable Cost**have a positive relationship. **Variable Cost**per unit produced or in other words the**Average****Variable Cost**generally remains constant. In some cases, it changes.- They are also known as the
**Prime Costs.** - Hypothetically, when the output unit becomes zero, the
**Variable Cost**is nullified accordingly.

**Types of Variable Cost**

In theory, two different types of **Variable** **Cost** curve exists.

**1. Non-linear Variable Cost**

As the name suggests, the **Variable Cost **value of the items is not linear in this type of curve. Meaning the value of the** Variable Cost **of the items does not increase in proportion to the unit increase. One such example is given below:

In this table, we can see that the **Variable Cost **is now set to 50, which means whatever the item number of the item produced, the cost of producing them would be 50. However as the **Variable Cost **is non-linear, the graph will be nonlinear as well, as shown below. According to the graph, when the no of units produced is zero, then the **Variable Cost **willÂ be zero. The only cost then remaining then will be the** Fixed Cost**.

**2. Linear Variable Cost**

As the name suggests here, the **Variable Cost **here in the table will be linear, which means that the value of the **Variable Cost **will increase in proportion to the unit increase. Furthermore, as the **Fixed Cost **wonâ€™t change with the change of unit increase, the total cost also going to be linear, as shown below.

In this table, we can see that the **Variable Cost **is now set to 50, which means whatever the item number produced, the cost of producing them would be 50. However, as the **Variable Cost **is linear, the graph will be linear as well, as shown below. According to the graph, when the **No of units Produced** is zero, then the **Variable Cost **will zero. The only cost then remaining then will be the **Fixed Cost.**

## Components of Variable Cost

There are different types of **Variable Costs**Â that exist, so, normally, the **Variable Cost**Â will consist of diverse types of components.

For example,

**Raw Materials****Labor Cost****Transportation****Manufacturing Overhead****Utility**

## Step-by-Step Procedure to Calculate Variable Cost Per Unit in Excel

For the demonstration purpose, we are going to use the following dataset. In this dataset, we have all the** Variable Cost **breakdowns per month listed. The **Variable Cost**Â is** Raw Materials**, **Labor Cost**, **Manufacturing Overhead,** etc.

### Step 1: Prepare Dataset

To get variable expenses per unit, we need to prepare the dataset properly, Otherwise, a poorly made dataset can produce flawed output that can lead to a misleading conclusion.

**Steps**

- In the beginning, we need to set up the dataset properly to calculate the
**Variable Cost**Â per month. - We know, that the
**Variable Cost**consists of various terms and factors like**Labor Cost**,**Manufacturing Overhead**, etc. - We will add the terms in the horizontal direction.
- Then we calculate the
**Variable Cost**for each month and then we will calculate the**Variable Cost**Â per unit or in other words, the**Average****Variable Cost**Â by dividing the total**Variable Cost**Â by the total amount of**Units**.

**Read More: ****How to Calculate Cost per Unit in Excel (With Easy Steps)**

### Step 2: Evaluate Variable Cost for Each Month

After preparing the dataset we are going to calculate the **Variable Cost **forÂ each month in the range of cells **G5:G16.**

**Steps**

- First, select the cell
**G5**, and then enter the following formula:

`=D5+E5+F5`

Entering this formula will calculate the **Variable Cost **of **January** in cell **G5.**

- Now drag the
**Fill Handle**in the corner of cell**G5**to cell**G16**. - Doing this will fill the range of cells
**G5:G16**with the**Variable Cost,**of the corresponding months in the range of cells**B5:B16**.

**Read More: ****How to Calculate Production Cost in Excel (3 Effective Ways)**

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**How to Calculate Selling Price from Cost and Margin in Excel****Calculate Price Per Pound in Excel (3 Easy Ways)****How to Calculate Coupon Rate in Excel (3 Ideal Examples)****Calculate Retail Price in Excel (2 Suitable Ways)****How to Calculate Weighted Average Price in Excel (3 Easy Ways)**

### Step 3: Calculate Total Variable Cost

After we calculated the **Variable Cost **forÂ each month, now we will calculate the total **Variable Cost **over the span of 12 months, using **the SUM function****.**

**Steps**

- Then select the cell
**E18**and enter the following formula:

`=SUM(G5:G16)`

Doing this will calculate the total **Variable Cost **over the span of the 12 months in cell **E18.**

### Step 4: Estimate Total Unit Produced

After we calculated the whole variable cost over the span of 12 months, we need to calculate how many units we produced in the 12 months, using **the SUM function****.**

**Steps**

- Now select the cell
**E19,**and enter the following formula:

`=SUM(C5:C16)`

Doing this will estimate the **Total Number of Units Produced** in the span of 12 months.

**Read More: ****How to Calculate Projected Cost in Excel (4 Effective Ways)**

### Step 5: Determine Variable Cost Per Unit

After we calculated the total **Variable Cost **and the total** No of units **produced over the span of 12 months. We will calculate the **Variable Cost **per unit as we got all the necessary parameters.

**Steps**

- Now select the cell
**E19**and enter the following formula:

`=E18/E19`

Doing this will divide the total **Variable Cost **by the **Total Amount of Units Produced**. Which in turn will calculate the **Variable Cost Per Unit** or in the other words, the** Average Variable Cost.**

By following the above step-by-step procedure, we were able to calculate **Variable Cost **per unit in Excel.

## Conclusion

To sum it up, the question â€śhow to calculate Variable Cost per unit in Excelâ€ť is answered here in 4 separate steps with elaborate explanations.

For this problem, a macro-enabled workbook is attached where you can practice these methods.

Feel free to ask any questions or feedback through the comment section. Any suggestion for the betterment of the **Exceldemy** community will be highly appreciable.

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