Maintaining low fixed costs and high variable costs rather than high fixed costs and low variable costs:

Question

Quizplus · Accepted Answer

Maintaining low fixed costs and high variable costs is a more conservative cost structure because it allows for greater flexibility in adapting to changes in the market or production levels. High fixed costs can be a burden if there is a downturn in sales or if production needs to be adjusted. Additionally, a higher contribution margin can be achieved with this cost structure by only incurring variable costs when there is a corresponding increase in revenue. Therefore, choice A is the best answer.

Maintaining Low Fixed Costs and High Variable Costs Rather Than