If a Company Reduces Its Fixed Costs,the Operating Income Will

question 211

True/False

If a company reduces its fixed costs,the operating income will increase by the same amount as the cost reduction.

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Definitions:

Variable Costs

Costs that vary depending on the level of production or sales.

Fixed Costs

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance costs.

Total Cost

The complete amount of money required to purchase, produce, execute, or maintain something, including all related expenses and charges.

Contribution Margin

The selling price per unit minus the variable cost per unit, reflecting the amount contributing to covering fixed costs.