![]() ![]() Fourthly, fixed costs can aid in reducing the risk of unexpected costs, which can be especially beneficial for companies with high levels of debt. Thirdly, fixed costs may enable some cost savings in the long-term by allowing the company to negotiate better deals with suppliers and employees. Secondly, they allow the company to absorb short-term fluctuations in sales and production, providing a more stable operating environment. ![]() Firstly, they provide a degree of certainty to the business by allowing them to budget and plan in the long-term. The company can increase its profits, if it reduces fixed and variable costs or raises the price of a set.įixed costs have several advantages. Currently the company sells a maximum of 100 sets. ![]() For the company to break even, it needs to sell over 95 kitchen sets a month. A standard set of kitchen furniture the company produces costs 1 000.
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