Now assume that PSC has a fixed operating expense of $400,000, in addition to Business Risk the variable expense of 60 percent of sales, shown as follows:

Power Software Company Forecasts

Probability of Occurrence

2% 8%20% 40% 20% 8% 2%

Sales$800 $1,000 $1,400 $2,000 $2,600 $3,000 3,200

Variable Expenses 480 600 8401,200 1,560 1,800 1,920

Fixed Expenses 400400 400400 400 400 400

Recalculate PSC's business risk (coefficient of variation of operating income). How does this figure compare with the business risk calculated with variable cost only?