Consider what type of a business would benefit from using variable costing. Discuss a business or entity (for example, a school) and what their income statement would look like using variable costing. Be specific in the revenues/ expenses that apply to the business/entity you choose and which would be grouped as variable versus fixed.

For example, with the school, revenues could be tuition and fundraising. Tuition will be variable based on the number of students, although a enrollment # is usually set ahead of time and the admissions coordinator works to fill the classes. Fundraising goals are usually set at the beginning of the year. What about costs? Biggest expenses are most likely teacher/ administrator salaries and rent. Rent is usually a fixed amount. Teacher, administrator salaries are usually fixed as well, unless enrollment is so high that the school decides to add an additional class. Then there will be an increase in the total teacher salary.

After discussing the income statement revenues and expenses, do you think variable costing would be a helpful tool for the managers?