Higher percentage increase in total variable cost

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Reference no: EM131202637

Company A has 50% of its total variable manufacturing cost in labor and the other 50% in fuel. Company B has 10% of its total variable manufacturing cost in labor and the remainder in fuel. Suppose in a given year, labor costs rise 6% and fuel costs rise 10%.

1) Using the information above, calculate the percentage increase in total variable cost for each company.

Percentage Increase in total variable costs:

Company A:

Company B:

2) Which company has higher percentage increase in total variable cost?

Reference no: EM131202637

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