Hello, I'm new member here, glad being part of the great website and great people here.

Help me out with this accounting question. Im Stuck totally :(

Question:

If company A has mostly Fixed cost, and company B has mostly Variable cost. When sales volume increase, which company would has higher percentage increase in profit?

And I'm required to write an explanation for around 500 words with example using numbers.

, give me some Hints on what do I have to discuss for the answer inorder to support the conclusion which is either company A or B would has higher percentage increase in profit.

Thanks for your kindly help.

Vic

That's not a very big word count, so you'll have to be brief!

I'd want to start by briefly explaining fixed cost;
Fixed cost - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Fixed_cost)

Then briefly explain variable cost;
Variable cost - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Variable_cost)

Then make a conclusion as to why either company A or B would make more profit.

Oh, and welcome to the site! Good to have you on board!

J

Thanks for the warmly welcome :-) And thanks for the help :-) :D


Oh, and welcome to the site! Good to have you on board!

J