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:

Functional Departmentation

The process of organizing an organization's structure into departments based on specific functions or tasks, such as marketing, finance, operations, etc.

Product Departmentation

An organizational structure where departments are created based on the products or product lines they manage or produce.

Strengths

The inherent capabilities or positive qualities that an individual possesses, which are beneficial for performing certain tasks or solving problems.

Organizational Customers

Entities, such as businesses, governments, or non-profits, that purchase goods or services from another organization for internal use, resale, or to support their operations.