i dint understand...while calculating variable cost...are we supposed to multiply it with units produced or units sold ? ,...pls help
PMabsorption n abc
think that way:
If what you are trying to calculate is a COST, in this case variable one, then it doesn't matter how many units you have sold, the cost arises in producing level, so what it counts is how much cost to produce x units. Then calculating revenue or profit you'll take in account how many you have sold.
If what you are trying to calculate is a COST, in this case variable one, then it doesn't matter how many units you have sold, the cost arises in producing level, so what it counts is how much cost to produce x units. Then calculating revenue or profit you'll take in account how many you have sold.