Income statements for companies

Question

TASK: Income statements for three companies are provided below:

	Company A	Company B	Company C
Sales (10 units)	$600	$600	$600
Less variable costs	400	250	0
Less fixed costs	100	250	500
Net income	$100	$100	$100

Q1. Prepare new income statements for the firms assuming each sells one unit less (i.e. each firm sells 9 units)

Q2. Briefly describe the effect of cost structure on profitability, including recommendations for each company given the current economic environment, as you understand it.