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Variable cost ratio = total variable cost / sales. As long as price and variable cost remain the same, these ratios will remain the same. It does not matter if the company sells 10 units or 1 million units, the percentage of each sale that becomes contribution margin or does to cover variable costs is the same.angout Limited, LLC sells one product priced at $40 per unit. The variable costs (direct materials, direct labor, variable overhead and variable selling) is $25 per unit. Calculate the contribution margin per unit, the contribution margin ratio and the variable cost ratio.
For example, if a lease contract is being renegotiated and a $10,000 per month lease payment is increased to $10,500 per month, fixed costs have risen, but not because of production levels. As mentioned above, fixed costs are one part of the total cost formula.The formula used to calculate costs is FC + VC(Q) = TC, where FC is fixed costs, VC is variable costs, Q is quantity, and TC is total cost.It is important to understand that variable costs, as opposed to fixed costs, are those costs that change based on the amount of product being produced.ormula for Fixed Costs. As mentioned above, fixed costs are one part of the total cost formula. The formula used to calculate costs is FC + VC(Q) = TC, where FC is fixed costs, VC is variable costs, Q is quantity, and TC is total cost.