Figure 4-2. Pauley Company provides home health care.Pauley charges $35/hour for professional care.Variable costs are $21/hour and fixed costs are $78,000.Next year,Pauley expects to charge out 12,000 hours of home health care.
Refer to Figure 4-2.What is the variable cost ratio?

Question

Quizplus · Accepted Answer

The variable cost ratio is calculated by dividing the variable costs per hour by the charge per hour: $21/$35 = 0.60 or 60%.