The scale factor of a drawing is the value that text and other scale sensitive entities in the drawing use to be the correct size on the plotted drawing. In AutoCADŽ variables like DIMSCALE and LTSCALE use the scale factor of the drawing to determine the size of dimensions and dashed lines in a drawing. Many of the Software commands rely on a scale factor variable to aid in the correct sizing of entities in a drawing. Blocks, text, and architectural symbols are a few of the things that rely on such a variable.
The Software commands use a variable named "SCA_KLH#". This variable is set when a drawing is opened by setting itself to the value of AutoCAD's DIMSCALE system variable. This variable is also set by the DWGSETUP command.
For your convenience some of the most common scale factor values are listed in the Help pull down when using any of the Software menus.
To calculate a drawing scale you simply perform the following:
1. Convert both value's units to the
same type.
2. Divide the second value by the first.
An example:
1/8" = 1'0"  
0.125" = 12.0"  Convert both value's units to the same type. (inches in this case) 
12.0 / 0.125 = 96  Divide the second value by the first. 
The scale factor for an 1/8" = 1'0" drawing is 96.
Another way to look at this same example:1/8" = 1'0"  
1/8" = 12.0"  Convert both value's units to the same type. (inches in this case) 
1/8 x 8 = 12 x 8  Multiply both sides by the denominator (bottom number) of the fraction 
1 = 96 
Voila! 
If the numerator (top number of the fraction) is not a "1"
3/4" = 1'0"  
3/4" = 12.0"  Convert both value's units to the same type. (inches in this case) 
3/4 x 4 = 12 x 4  Multiply both sides by the denominator (bottom number) of the fraction 
3 = 48 

3 / 3 = 48 / 3  Now divide each side by the 3 
1 = 16  Voila! 
The scale factor for 3/4"=1'0" is 16.