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Variable - Fixed Cost Illustration

Variable - Fixed Cost Illustration - Effect of Variable...

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Company A 1000 units sold @ $100 / unit 100,000 Total Costs 80000 Operating Income 20000 If you can increase sales volume by 20% by decreasing the selling price by 10%, what is the result?
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Effect of Variable Cost vs. Fixed Cost components on Operating Income Company A Company B 1000 units sold @ $100 / unit 100,000 1000 units sold @ $100 / unit 100000 Total Costs 80000 Total Costs 80000 Operating Income 20000 Operating Income 20000 If you can increase sales volume by 20% by decreasing the selling price by 10%, what is the result?
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Effect of Variable Cost vs. Fixed Cost components on Operating Income Company A Company B 1000 units sold @ $100 / unit 100,000 1000 units sold @ $100 / unit 100000 Variable Cost @ $20 / unit 20000 Variable Cost @ $60 / unit 60000 Fixed Cost 60000 80000 Fixed Cost 20000 80000 Operating Income 20000 Operating Income 20000 If you can increase sales volume by 20% by decreasing the selling price by 10%, what is the result?
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Unformatted text preview: Effect of Variable Cost vs. Fixed Cost components on Operating Income Company A Company B 1000 units sold @ $100 / unit 100,000 1000 units sold @ $100 / unit 100000 Variable Cost @ $20 / unit 20000 Variable Cost @ $60 / unit 60000 Fixed Cost 60000 80000 Fixed Cost 20000 80000 Operating Income 20000 Operating Income 20000 If you can increase sales volume by 20% by decreasing the selling price by 10%, what is the result? Company A Company B 1200 units sold @ $90 / unit 108000 1200 units sold @ $90 / unit 108000 Variable Cost @ $20 / unit 24000 Variable Cost @ $60 / unit 72000 Fixed Cost 60000 84000 Fixed Cost 20000 92000 Operating Income 24000 Operating Income 16000 Result is a 20% increase in Operating Income Result is a 20% decrease in Operating Income...
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