Find the best answers to your questions at Westonci.ca, where experts and enthusiasts provide accurate, reliable information. Explore our Q&A platform to find in-depth answers from a wide range of experts in different fields. Connect with a community of professionals ready to provide precise solutions to your questions quickly and accurately.
Sagot :
Answer:
starting out in a hole that represents economic losses if the firm produces nothing.
Explanation:
Cost-volume-profit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.
Fixed costs can be defined as predetermined expenses in a business that remain constant for a specific period of time regardless of the quantity of production or level of outputs. Thus, they are the costs which are not directly related to the level of production or not affected by the quantity of output in an organization. Some examples of fixed costs in business are loan payments, employee salary, depreciation, marketing costs, rent, insurance, lease, utilities, administrative cost, research and development costs, etc.
Furthermore, fixed costs may be relevant in a decision because it affects the amount of future cash-flow of a business entity.
Hence, the fixed costs for a firm are analogous to starting out in a hole that represents economic losses if the firm produces nothing. This simply means that, the firm is only using it money to fund the all of the necessary items or utilities required for the operation of its business but do not produce any goods or services. Simply stated, the firm is not generating any revenue as its produces nothing.
We appreciate your time. Please revisit us for more reliable answers to any questions you may have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.