Unformatted text preview: to 50,000 units. Within this relevant range all fixed costs, such as rent, equipment depreciation, and administrative salaries remain constant . If Friends Company decides to produce more valves, they have to hire additional staff and rent more equipment , which will result in an increase of fixed costs . On the contrary, if the production level is reduced, Friends Company has to reduce staff and rental expenses , so fixed costs will decrease . Note: See slide 16 (Ch. 6 Presentation A) & slide 14, 22 – 26 (Ch. 6 Presentation B)....
View Full Document
- Spring '11
- relevant range, Friends Company