Variable Cost of Goods Sold (VCOGS) is a business term that measures your variable costs associated with producing goods and services. It helps you track the performance of individual products and inform budgetary decisions. The formula for VCOGS is: Start with Total Manufacturing Costs, then subtract Fixed Costs (including depreciation). This will give you Variable Costs. Finally, divide this number by the number of Units sold to come up with the Variable Cost of Goods Sold figure. Understanding how this formula works can help you make better decisions as a business owner, ensuring both cost-savings and profitability.