COST VOLUME PROFIT Suppose a company approved to automate a production column. Explain what effects this would ha

Answers:
Cost structure refers to the relative proportion of fixed and variable costs in an institute. Investing in automated equipment increases fixed costs and reduces changeable labor costs.

Comparison of cost structures:

"A company with higher fixed costs and lower unfixed costs will experience wider swings in net operating income as sale fluctuate, with greater profits in honest years and greater losses in bad years.

A company beside lower fixed costs and higher variable costs will soak up greater profit stability and will be more protected from losses during bad years, but at the cost of lower net operating income surrounded by good years."

So, in this bag, if the company automates and then experiences a downturn in sale of the product, it will sustain higher losses than it would have if the production dash was labor based. Source(s): (Paraphrased) Quote from 'Managerial Accounting' 12e - Garrison, Noreen, & Brewer

Related Questions:
Production lines hold stopped, memory bank hold shut down, CPU almost to budge bad flash. What do i do?   Suppose a company arranged to automate a production rank. Explain what effects this would own on a company’s c?   Top of the strip music production? demo studio?   What is the production flash of B4C ?   What rap artist owns a movie production and a diamond queue?  
  • I worked within a factory 10 years on a production chain..?
  • There's an specific first name for the production lines which are competent to to different products one after the other?
  • Soda factory (production line) duty description?
  • Why is it that some Production Possibilities curve graphs can appear to be surrounded by a straight strip, not curved?
  • What would a linear (straight-line) production possibilities curve intimate?