How to calculate variable cost ratio?
Understand the Problem
The question is asking for the method or formula to calculate the variable cost ratio, which is a financial metric that helps in understanding the relationship between variable costs and revenue.
Answer
Divide total variable costs by total net sales and express as a percentage.
To calculate the variable cost ratio, divide total variable costs by total net sales and express as a percentage.
Answer for screen readers
To calculate the variable cost ratio, divide total variable costs by total net sales and express as a percentage.
More Information
The variable cost ratio is a useful metric in cost accounting allowing businesses to understand the proportion of variable costs in relation to their revenue. This ratio helps in pricing strategies and cost management.
Tips
Common mistakes include not expressing the result as a percentage or confusing variable costs with fixed costs.
Sources
- Variable Cost Ratio: Definition, How to Calculate, Examples - 10xSheets - 10xsheets.com
- Variable Expense Ratio | Formula + Calculator - Wall Street Prep - wallstreetprep.com
- Variable Cost Ratio Calculator - Calculator Academy - calculator.academy
