BETA

To show the impact of operating leverage on beta

Case 1: High Fixed Costs (30000) and
Case 2: Low Fixed Costs (5000) and
low variable costs ($2.5 per unit)
high variable costs ($6 per unit)
Fixed cost =
30000
5000
Volume
Revenue
Variable costs
Profit
Variable Costs
Profit
0
0
0
-30000
0
-5000
1
10000
2500
-22500
6500
-1500
2
20000
5000
-15000
13000
2000
3
30000
7500
-7500
19500
5500
4
40000
10000
0
26000
9000
5
50000
12500
7500
32500
12500
6
60000
15000
15000
39000
16000
7
70000
17500
22500
45500
19500
8
80000
20000
30000
52000
23000
9
90000
22500
37500
58500
26500
10
100000
25000
45000
65000
30000
11
110000
27500
52500
71500
33500
12
120000
30000
60000
78000
37000
13
130000
32500
67500
84500
40500
14
140000
35000
75000
91000
44000

Relation between Volume a

Fixed Costs $30,000; Var. Co
Revenues, Costs and Profits

Revenues, Costs and Profits

Relation Between Volume and Profits

Fixed Costs $5,000; Var. Costs $6.00

160000
140000
120000
100000
80000
60000
40000
20000
0
-20000
Volume

Page 1

160000
140000
120000
100000
80000
60000
40000
20000
0
-20000 0
-40000

BETA

Fixed Costs (5000) and

costs ($6 per unit)

Relation between Volume and Profit

Fixed Costs $30,000; Var. Costs $2.50

10

15

Volume

Page 2