Decisions related to fixed and variable costs are very sensitive to changes in volume related factors and project scope.

Question

Quizplus · Accepted Answer

Decisions related to fixed and variable costs are indeed sensitive to changes in volume related factors (such as sales or production quantities) and project scope (such as the expected duration and outcomes of a project). When volume or scope changes, the level of fixed costs needed to cover overhead expenses may no longer be sufficient or may become excessive, while variable costs may vary in step with the level of activity. Therefore, managers must carefully analyze and adjust cost structures to match the expected demand and goals of their operations.

Decisions Related to Fixed and Variable Costs Are Very Sensitive