Hamid Sandhu
Newspaper article # 3
You have read about costs of production. Find a newspaper article that discuss a firms total cost, total
fixed cost and total variable OR its average total cost, average variable cost and average fixed cost.
Explain what is happening to its costs, why it is happening and draw the situation with the correct
curves.
For this assignment we are tackling Gamestop as the business of focus. Costs that remain the
same and never change regardless of the enhancement or changes in the business are considered as
fixed costs. For instance, property tax, rent, cost of utilities (security alarm, phone, water, electric etc),
employee salary and other payroll costs all consist of fixed costs. All costs that are dependent on the
volume of sales is variable cost. A few examples of this would be cost of merchandise, supplies, shipping,
sales tax, shrinkage, any and all special events related to the business etc. The total cost is simply the
addition of variable cost with the fixed cost, which is all the expenses/cost the business has before it can
consider profits.
Although Gamestop had an increase in its total profits by 2.6% at the end of 2017, the
companies hard fixed costs do not leave much room to expand or enhance its brick stores around the
country. Over the years the total cost of the gamestop has fluctuated from $490 million up to $646
million back down to $564 million. The highest cost happen to be the same year gamestop had its
highest gross profit. The reason for this inconsistency is with the economy slowing down, people are
looking to spend less hence why the downward trend in 2010 with the recession, but from there with
the economy improving and more money being put back into consumers pockets this resulted in more
spending and more Gamestop stores opening around the globe, resulting in additional revenue.
