Learn in the textbookBreak-Even Point Analysis
DefinitionThe variable cost ratio (変動費率) is the share of sales taken up by variable costs, found as variable costs ÷ sales.
ExplanationIf the unit price and the variable cost per unit hold steady, the variable cost ratio stays constant as sales volume rises or falls. 1 − variable cost ratio is the contribution margin ratio, the share of sales that goes toward recovering fixed costs and toward profit. For example, with a variable cost ratio of 0.7, 30% of sales is available to cover fixed costs and profit.