Sales volume changes in firms with high fixed costs will result in stable gross profit margins.

Question

Quizplus · Accepted Answer

Fluctuations in sales volume will impact the utilization of fixed costs, causing gross profit margins to become unstable. As sales volume increases, fixed costs are absorbed over a larger number of units, resulting in higher gross profit margins. Conversely, when sales volume decreases, fixed costs are spread over fewer units, causing gross profit margins to decrease.

Sales Volume Changes in Firms with High Fixed Costs Will