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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.
Total cost is variable cost and fixed cost combined. Now divide total cost by quantity of output to get average total cost. Average total cost can be very handy for firms to compare efficiency at different output or when adjusting different factors of production.