Consider the same company one more time:

Revenues: 500

Variable Costs 250

Fixed Costs 100

1. Assuming volume decreases 10%, what will revenues, variable costs and fixed costs

be in year 2? What will operating income be? What will the operating margin be in

year 2?

2. Assume in the above that variable costs were 150 and fixed costs were 200.

What will revenues, variable costs and fixed costs be in year 2? What will the

operating margin be in year 2?