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How is variable rate calculated?

Select one:
a. variable cost multiplied by sales
b. variable cost divided by sales

1 Answer

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The variable rate is calculated as a fraction of the total cost and a variable that is unknown. This fraction of the total cost is used to represent the variable cost per unit. The following is how to calculate the variable rate:Answer: b. variable cost divided by salesTo determine the variable rate, divide the variable cost by sales. The variable rate, sometimes known as the unit variable cost, is an important component of a company's income statement. It helps to calculate the costs associated with each unit of production.The variable rate is determined using the following formula:Variable rate = Variable cost / SalesVariable cost refers to the cost of producing a single unit of the product or service. It includes all of the expenses that vary as the level of output changes, such as the cost of raw materials and labour. Sales, on the other hand, refer to the total number of products sold in a given time period.

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