Discussion
Comparing a high-fixed-cost with a high-variable-cost structure at low volume, the high-variable-cost structure
Answer: A
Correct answer: makes a smaller loss or a profit sooner
At low volume the high-variable-cost structure has less fixed cost to cover, so it reaches break-even at a smaller quantity and loses less below it. The high-fixed-cost structure has the wider contribution margin, so it overtakes above the indifference volume and earns more thereafter. Low leverage is the safer structure at low or uncertain volume; high leverage is the more profitable at high volume.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development