Question - 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 $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 350 words or more - describe the effect of cost structure on profitability, including recommendations for each company given the current economic environment, as you understand it.