Companies that carry a high level of fixed costs relative to variable costs are considered to have

Question

Quizplus · Accepted Answer

Companies with a high level of fixed costs bear more risk because they have to cover their fixed costs regardless of changes in sales or revenue. If sales volume drops, they may not be able to reduce their fixed costs in proportion to the drop, resulting in lower profitability or even losses. Companies with a high level of variable costs, on the other hand, are more flexible in adjusting their costs in response to changes in sales volume.

Companies That Carry a High Level of Fixed Costs Relative