If a fiRm Has Low fiXed Costs Relative to All

question 46

Multiple Choice

If a firm has low fixed costs relative to all other firms in the same industry, a large change in sales volume (either up or down) would have:

• A)a smaller change in EBIT for the firm versus the other firms.
• B)no effect in any way on the firms as volume does not effect fixed costs.
• C)a decreasing effect on the cyclical nature of the business.
• D)a larger change in EBIT for the firm versus the other firms.
• E)None of the above.

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Definitions:

Frederick Taylor

An American mechanical engineer who sought to improve industrial efficiency and is known as the father of scientific management.

Strength

The quality or state of being physically strong or the capacity to endure or resist under stress or challenge.

Executives

Individuals who manage, direct, and oversee the operations and strategy of an organization, typically holding high-ranking positions like CEO, CFO, and others.

Top Levels

Refers to the highest tiers of management or leadership within an organization, often responsible for strategic decision-making.