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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.
In economics, total cost is made up of variable costs + fixed costs. Variable costs (VC) are costs that change based on how many goods you produce or how much of a service you use. Fixed costs (FC) are costs that don't change from month to month and don't vary based on activities or the number of goods used.ormula. TC (total cost) = TFC (total fixed cost) + TVC (total variable cost). Now that you know the formula and things to consider, let's go back to that question in the beginning of how much it costs to operate your car every month.