Variable cost: A variable cost is the cost which changes with value of sales units. Fixed cost: The cost which is rigid in nature and does not vary with the change in sales units is called a fixed cost. Which company will tend to realize the greatest increase in profits and why?

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Chapter 5, Problem 3Q

To determine

Introduction:

Variable cost: A variable cost is the cost which changes with value of sales units.

Fixed cost: The cost which is rigid in nature and does not vary with the change in sales units is called a fixed cost.

Which company will tend to realize the greatest increase in profits and why?

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