How To Calculate Variable Cost As A Percentage?


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Connor Sephton answered
To calculate variable cost as a percentage, you'll need to divide your variable expenses by your entire revenues; the result will be your costs, or expenses, expressed as a percentage of your total sales. Getting the right results depends on expert record keeping as you plan your budget and track your efforts. You'll need to know exactly how much you are spending on variable (changing) costs each month; this data should be stored in an Excel spreadsheet, or other, similar accounting program.

If you don't have access to these programs, do it the old-fashioned way by keeping a ledger or notebook filled with the information you need; you'll also need to know exactly how much money you are making (your revenue) every month. In fact, you can calculate variable cost as a percentage for any time frame you like; daily, weekly, monthly or yearly percentages can be calculated easily, as long as you have the right information on costs and revenue for a defined time period.

How To Use Variable Cost As A Percentage

To get the most out of this useful statistic, you can use it for the following purposes:

• Business plan to attract new investors or secure financing from a bank or credit union
• Fiscal reports for month-end, year-end, or quarterly reporting.
• Business planning - this percentage will help you to decide how much to order, how to trim variable costs, and how to plan ahead for more profitability and efficiency.

Some familiarity with mathematics may help you to grasp the fundamentals of calculating variable cost as a percentage; however, there are many ways to automate the calculation, so that you can avoid doing any actual math. Formulas can be plugged into programs, such as Excel software, to give you instant access to variable cost as a percentage; if you use the right formula, the percentage will adjust automatically every time you add revenue or variable cost information into your database.

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