Couzen's Companys cost structure is dominated by variable costs with a contribution margin ratio of 0.28 and fixed costs of $517,500. Every dollar of sales contributes 28 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is dominated by fixed costs with a higher contribution margin ratio of 0.78 and fixed costs of $2,673,750. Every dollar of sales contributes 78 cents toward fixed costs and profit. Both companies have sales of $4,312,500 annually.

Required:

Compare the two companies cost structures.

Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each companys profits decrease?

A) Compare the two companies cost structures.

	Couzens Company			Jones & Family
	Amount	Percentage		Amount	Percentage
Sales			%			%
Variable cost			%			%
Contribution margin			%			%
Fixed costs			%			%
Operating profit			%			%

Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each companys profits decrease?

Couzens Companys profits decrease by
Jones & Familys profits decrease by