What are selling,general and administrative costs considered "sticky?"
A)These costs increase more when sales increase than they decrease when sales decrease by the same amount.
B)These costs increase less when sales increase than they decrease when sales decrease by the same amount.
C)These costs increase the at the same rate when sales increase and decrease at the same rate when sales decrease by the same amount.
D)None of the answers are correct.

Question

Quizplus · Accepted Answer

Selling, general, and administrative costs are considered "sticky" because they tend to increase more when sales increase than they decrease when sales decrease by the same amount. This is due to the fact that many of these costs are fixed and do not vary with changes in sales volume, such as salaries and rent. As a result, when sales increase, these costs do not increase proportionally, leading to a higher profit margin. However, when sales decrease, these costs may not decrease at the same rate, leading to a lower profit margin.

What Are Selling,general and Administrative Costs Considered "Sticky