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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 this section we will look at how you calculate marginal cost, total cost, fixed cost, total variable cost, average total cost, average fixed cost, and average variable cost when you have a linear relationship between total cost and quantity. These are equations such as TC = 400Q + 20, or TC = 50 + 6Q.