Why did profit rise when revenue fell?
Put a dollar value on each driver and reconcile the total.
The question
You support an invented maintenance business. All figures are in USD. Each job is completed and billed in the same month.
| Plan | Latest | |
|---|---|---|
| Jobs | 1000 | 900 |
| Charge per job ($) | 100 | 110 |
| Variable cost per job ($) | 60 | 65 |
| Fixed cost ($) | 20000 | 20000 |
Fictional monthly inputs. Rates apply to each completed job.
Use a volume-first bridge. Change the charge next, then variable cost per job, then fixed cost.
“Why did profit rise when revenue fell?”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Isolate volume
What would you do here? Open the move you’d make.
Isolate volume
The strong move. 100 fewer jobs at $40 planned contribution reduces profit by $4,000.
Use $100 planned revenue per job for profit
Tempting, but it misses something. That skips the $60 variable cost saved per lost job.
See how a strong candidate says it
“100 fewer jobs at $40 planned contribution reduces profit by $4,000.”
Why it works: That skips the $60 variable cost saved per lost job.
Step 2: Isolate charge
What would you do here? Open the move you’d make.
Apply the $10 increase to 1,000 jobs
Tempting, but it misses something. The bridge has already moved volume to 900.
Isolate charge
The strong move. The $10 charge increase on 900 jobs adds $9,000.
See how a strong candidate says it
“The $10 charge increase on 900 jobs adds $9,000.”
Why it works: The bridge has already moved volume to 900.
Step 3: Isolate unit cost
What would you do here? Open the move you’d make.
Isolate unit cost
The strong move. The $5 cost increase on 900 jobs subtracts $4,500.
Leave unit cost out because total costs fell
Tempting, but it misses something. The unit cost rose. Fewer jobs explain the fall in total costs.
See how a strong candidate says it
“The $5 cost increase on 900 jobs subtracts $4,500.”
Why it works: The unit cost rose. Fewer jobs explain the fall in total costs.
Step 4: Reconcile profit
What would you do here? Open the move you’d make.
Report only that profit beat plan
Tempting, but it misses something. The total conceals the volume miss and higher unit cost.
Reconcile profit
The strong move. Fixed cost is unchanged. Net change is +$500, from $20,000 to $20,500. Revenue fell $1,000.
See how a strong candidate says it
“Fixed cost is unchanged. Net change is +$500, from $20,000 to $20,500. Revenue fell $1,000.”
Why it works: The total conceals the volume miss and higher unit cost.
The answer, in short
- Decision
- Fixed cost is unchanged. Net change is +$500, from $20,000 to $20,500. Revenue fell $1,000.
- Because
- The $5 cost increase on 900 jobs subtracts $4,500.
- What would change it
- A change in the order of the bridge moves the interaction between drivers.
Common traps
- Use $100 planned revenue per job for profit
- Apply the $10 increase to 1,000 jobs
- Leave unit cost out because total costs fell
- Report only that profit beat plan
Check your answer
- Isolate volume
- Isolate charge
- Isolate unit cost
- Reconcile profit
Last reviewed Nov 10, 2026