The firm's cost-volume-profit relationship is most influenced by variable cost and, thus, the level of fixed or operating costs plays a relatively minor role.

Question

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The firm's cost-volume-profit relationship is influenced by both variable and fixed costs. The level of fixed or operating costs can have a significant impact on the break-even point and overall profitability of the firm.

The Firm's Cost-Volume-Profit Relationship Is Most Influenced by Variable Cost