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Prior to going any more, find the following example. Costs behaviour for capital intensive sector (Rs)FY02FY03ChangeSales (A)10012020.0%Less: Fixed cost50500.0%Variable cost202210.0%Total cost (B)70722.9%Operating profit (A B)304860.0%Operating margin30.0%40.0% The aforementioned table clearly brings forth the red supras for kids behavior of fixed and variable costs for the capital intensive sector like cement when sales is gaining momentum. Though sales rose by 20% in FY03 and glued costs remained the identical, operating margins rose quicker resulting from a below proportionate surge in variable cost..

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