Question

Question - increases its fixed operating costs and reduces...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Question:  Why do  HIGH  fixed  costs create more variability? A Firm has TWO types of costs: * Fixed Operating Costs      (i.e.  administrative salaries, insurance,  rent, property taxes, etc.)  *  Variable Operating Costs  (i.e.  materials, labor, utilities,  packaging, sales commissions,  income taxes, etc.) What happens if the firm 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: increases its fixed operating costs and reduces (or eliminates) its variable costs ? How easily can a firm make this change to the cost structure? Breakeven Point Formula: Total FC Unit Contribution Margin Breakeven Point Formula: Total FC Unit Contribution Margin...
View Full Document

Page1 / 2

Question - increases its fixed operating costs and reduces...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online