Determining effect of cost structure on profitability

Assignment Help Accounting Basics

Reference no: EM13149466

Income statements for three companies are provided below:

Company A Company B Company C

Sales (10 units) $600 $600 $600

Less variable costs $400 $250 $0

Less fixed costs $100 $250 $500

Net income &n bsp; 100 $100 $100

a) Prepare new income statements for the firms assuming each sells one unit less (i.e. each firm sells 9 units)

b) Briefly - in 150 words or less - describe the effect of cost structure on profitability, including recommendations for each company given the current economic environment, as you understand it.

Reference no: EM13149466

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