![]() Variable costs change over time and often depend on the business' production volume, like materials and labor. What is average variable cost?Īverage variable cost is the cost of all variable expenses involved in creating a product. ![]() In this article, we explain what average variable cost is, provide the two formulas for finding this cost, explain how to calculate this cost and share tips and examples to help you better understand this concept. Calculating average variable costs allows you to compare the costs of making a single unit to the sales price, which can help you determine if it's worthwhile to produce the product. As variable costs like labor and materials shift, it's necessary for manufacturing businesses to determine whether a certain product is profitable. ![]() Tracking maintenance and production costs is important for businesses since this can provide valuable data about an organization's profits and financial health. ![]()
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May 2023
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