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