Finance Tools
Fixed vs Variable Cost Exposure Calculator
Compare how fixed-cost-heavy and variable-cost-heavy structures respond to revenue or cost shocks, and identify which cost structure is more exposed.
Compare how fixed-cost-heavy vs variable-cost-heavy structures respond to revenue shocks.
Example: -10 = revenue drops 10%
Base profit: $250,000
Fixed-cost structure
Profit after shock: $150,000
Change: -$100,000
Variable-cost structure
Profit after shock: $185,000
Change: -$65,000
Fixed costs amplify profit volatility under revenue shocks (operating leverage).
How it works
- Fixed costs stay constant regardless of revenue.
- Variable costs scale with revenue.
- Higher fixed costs increase operating leverage and volatility.
FAQ
Which structure is safer?
Variable-cost-heavy structures are more resilient during downturns.
Why keep fixed costs then?
Fixed costs can amplify profits when revenue grows.
How to use this fixed vs variable cost exposure calculator
- Enter total revenue.
- Enter fixed costs and variable cost percentage.
- Apply a revenue or cost shock.
- Compare profit sensitivity under fixed vs variable cost structures.
Example
A company has $1,000,000 revenue, $400,000 fixed costs, and 35% variable costs.
- Revenue drops by 10%
- Fixed-cost structure absorbs the full revenue shock
- Variable-cost structure partially adjusts costs downward
- Profit volatility differs by cost mix
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