You are considering two business plans. You must explain these plans to a potential investor. At the current capacity, both plans are expected to generate the same amount of profit. Plan 1, however, has higher proportions of variable costs, while Plan 2 has mostly fixed costs.

Required:

1. When sales decrease, which plan will tend to result in a greater profit decrease?

2, Select one plan and explain the reasoning For your choice. Be sure to explain technical definitions as your investor may not be familiar with them.