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					                                                                     BETA


                                            To show the impact of operating leverage on beta
                                            Case 1: High Fixed Costs (30000) and             Case 2: Low Fixed Costs (5000) and
                                            low variable costs ($2.5 per unit)               high variable costs ($6 per unit)
                               Fixed cost =                    30000           5000
                               Volume       Revenue                   P
                                                         Variable costs rofit                             Profit
                                                                                             Variable Costs
                                          0            0            0        -30000                     0        -5000
                                          1       10000          2500        -22500                 6500         -1500
                                          2       20000          5000        -15000                13000          2000
                                          3       30000          7500         -7500                19500          5500
                                          4       40000        10000              0                26000          9000
                                          5       50000        12500           7500                32500         12500
                                          6       60000        15000          15000                39000         16000
                                          7       70000        17500          22500                45500         19500
                                          8       80000        20000          30000                52000         23000
                                          9       90000        22500          37500                58500         26500
                                        10      100000         25000          45000                65000         30000
                                        11      110000         27500          52500                71500         33500
                                        12      120000         30000          60000                78000         37000
                                        13      130000         32500          67500                84500         40500
                                        14      140000         35000          75000                91000         44000


                              Relation Between Volume and Profits                                                               Relation between Volume a
                              Fixed Costs $5,000; Var. Costs $6.00                                                             Fixed Costs $30,000; Var. Co
Revenues, Costs and Profits




                                                                                                 Revenues, Costs and Profits
                               160000                                                                                           160000
                               140000                                                                                           140000
                               120000                                                                                           120000
                               100000                                                                                           100000
                                80000                                                                                            80000
                                60000                                                                                            60000
                                                                                                                                 40000
                                40000                                                                                            20000
                                20000                                                                                                0
                                    0                                                                                           -20000 0
                               -20000                                                                                           -40000
                                                        Volume




                                                                     Page 1
                                             BETA



 Fixed Costs (5000) and
 costs ($6 per unit)




 Relation between Volume and Profit
Fixed Costs $30,000; Var. Costs $2.50




                     5             10   15

                          Volume




                                             Page 2

				
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posted:8/7/2012
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