College Essays-fixed costs and low variable costs, low fixed costs and high variable costs
Choose two publicly-held organizations. One organization must have high fixed costs and low variable costs, and the other organization must have low fixed costs and high variable costs.
Note: A publicly-held organization is a private-sector firm that is owned by stock holders. Companies with high fixed costs include manufacturing companies, such as automobile manufactures, whereas service companies, such as accounting firms, might have low fixed costs.
- Analyze your two chosen companies’ cost construction. Do the companies have high fixed costs or low fixed costs? Do the companies have high variable costs or low variable costs? What evidence presents itself to support your findings?
- In Excel®, chart the relationship between total cost and the number of units produced (output) for each organization/company. Plot two lines on the graph – one line for each company you analyzed. Copy your graph from Excel® and paste it into your PowerPoint® presentation.
- Analyze currently used methods to minimize costs for the companies and provide recommendations how to improve the process of minimizing costs based on the available information for the industries in which the companies operate.
