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

Question

Quizplus · Accepted Answer

The variable cost ratio is calculated as variable costs divided by sales price per unit. Here, variable costs are $21 per hour and the charge rate is $35 per hour. So, the variable cost ratio = ($21 / $35) = 0.6 or 60%.

Green Acres Company Provides Home Health Care