Variable Cost Ratio Calculator

Calculate the variable cost ratio (VCR) which is the proportion of variable costs to total revenue. This ratio helps businesses understand cost structure and pricing strategies.

Input Parameters

Calculation Results

Calculation Formula

VCR = Total Variable Costs / Total Revenue

Where:
VCR = Variable Cost Ratio
Total Variable Costs = Costs that change with production volume
Total Revenue = Total sales revenue

Variable Cost Ratio Calculator Calculator Usage Guide

Learn how to use the Variable Cost Ratio Calculator calculator and its working principles

How to Use This Calculator

  1. Enter your Total Revenue (the total sales revenue for a period)
  2. Enter your Total Variable Costs (costs that vary directly with production volume)
  3. Click the Calculate button to compute the Variable Cost Ratio
  4. The calculator will display both the ratio (as a decimal) and as a percentage

Understanding Variable Cost Ratio

The Variable Cost Ratio (VCR) is a crucial financial metric that indicates what portion of your revenue is consumed by variable costs. It helps in:

  • Understanding cost structure
  • Setting pricing strategies
  • Evaluating profitability at different production levels
  • Assessing business efficiency

Interpreting Results

A lower VCR (closer to 0) indicates better cost control and higher profitability, while a higher VCR suggests that a larger portion of revenue goes toward covering variable costs.

Example: If your total revenue is $100,000 and your total variable costs are $60,000, your VCR would be 0.60 or 60%. This means 60% of your revenue is used to cover variable costs, leaving 40% for fixed costs and profit.