For many corporationssuch as utility companies,a major portion of thecost of production is fixed in...

Question

For many corporationssuch as utility companies,a major portion of thecost of production is fixed in the short run. Should these verylarge fixed costs be ignoredwhen the executives are making outputand pricing decisions? Why?

Komalavalli · Accepted Answer

Fixed costs are expenses that constant with the quantity of a product or service produced or sold. Fixed costs are expenses incu
ed by a company regardless of its commercial activities. This means that permanent fixed costs are frequently indirect, in the sense that they are unconnected to a corporation's provision of goods or services.Businesses frequently have two types of costs that contribute to their overall costs (fixed and variable). Breakpoints are commonly used to minimize fixed expenses. The quantity of production at which revenue equals costs is calculated utilizing both fixed and variable costs in a
eak-even analysis. This is a critical component of cost structure analysis. The
eakeven point of a corporation can be useful for making fixed and variable cost decisions. It also influences the price at which a corporation decides to trade its items. As previously stated, fixed costs are those expenses made by a firm that do not alter over the course of commercial operations. When related to the...

For m any cor p o rations s u ch as utili t y c o m p anies, a major p ort i on of t h e cost of p r oduct i on is fi x e d in the short run. Should these ve r y large f i xed c os t s be ig n o r ed...

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