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Formula of Variable Cost. The formula to calculate variable cost is: Total Variable Cost = Total Quantity of Output * Variable Cost Per Unit of Output. To recognize variable costs, it is important to understand how to categorize costs.Variable costs are those which do not remain constant, specifically when production activities fluctuate.ormula of Variable Cost. The formula to calculate variable cost is: Total Variable Cost = Total Quantity of Output * Variable Cost Per Unit of Output. To recognize variable costs, it is important to understand how to categorize costs.
The Relationship between total cost ,total fixed cost,total variable cost are as follows-. 2) Only total variable cost changes to total cost because total fixed cost always remains fixed and never increase and decrease with the change in level of output. 1) Average cost is the sum total of average fixed cost and average variable cost. AC=AFC+AVC. 2) The gap between AC and AVC comes closer and closer but never intersect each other because AC=AFC+AVC and AFC is continuously falling and never rises.