- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
For an organisation that has more of fixed cost than variable cost like an organasation in the hotel industry, what will be the best measure of its performance. I will appreciate if the response can be both specific and generalise.
Operating gearing is a main measure when considering fixed costs. It can be defined as Fixed costs/Total costs. Usually this is interpreted as the lower the better as the company is safer in a downturn.
Sales/fixed costs can be of use. It shows the amount of sales generated by each $ of fixed costs (high = good). Or in manufacturing you could use fixed costs/units made (low = good)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.