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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.
We will consider the following seven terms: Marginal Cost, Total Cost, Fixed Cost, Total Variable Cost, Average Total Cost, Average Fixed Cost, and Average Variable Cost. When asked to compute these seven figures on an assignment or on a test, the data you need is likely to come in one of three forms.otal Variable Costs. Total Variable Cost of Producing 4 units = Total Cost of Producing 4 Units â Total Cost of Producing 0 units. In our case it costs us 840 to produce 4 units and 130 to produce 0. Then our total variable costs when we produce 4 units is 710 since 810-130=710.