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C co currently satisfies 60% of the external demand for its components. It’s variable cost represents 40% of revenue. Could you please explain this statement to me
They are two unrelated statements.
If they currently satisfy 60% of the external demand, then for every 60 that they currently sell, they could sell 100 (i.e. an extra 40) externally.
If variable costs are 40% of revenue, then for every $100 revenue they have $40 variable costs.
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