variable cost ratio

The variable cost ratio is the variable costs of goods sold divided by net sales,

Variable cost ratio is variable costs divided by net sales.

- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.

- Example: The costing team uses **variable cost ratio** to allocate costs and analyze margins by product line.

- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.