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Equillion, Inc., and Storis, Inc., are two companies in the pharmaceutical industry. Equillion has relatively high fixed costs related to research and development. Storis,
Equillion, Inc., and Storis, Inc., are two companies in the pharmaceutical industry. Equillion has relatively high fixed costs related to research and development. Storis, however, does little research and development. Instead, the company pays for the right to produce and market drugs that have been developed by other companies. The amount paid is a percent of sales. Thus, Storis has relatively high variable costs and relatively low fixed costs: Sales Less variable costs Less fixed costs Profit Equillion, Inc. Storis, Inc. $150,000,000 $150,000,000 37,500,000 90,000,000 90,000,000 37,500,000 $ 22,500,000 $ 22,500,000 If sales increases by 20%, profit for Equillion Inc. will increase by $ for Storis Inc. will increae by $ and profit
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