Question

What are selling, general and administrative costs considered “sticky?” a. These costs increase more when sales...

What are selling, general and administrative costs considered “sticky?”

a.

These costs increase more when sales increase than they decrease when sales decrease by the same amount.

b.

These costs increase less when sales increase than they decrease when sales decrease by the same amount.

c.

These costs increase the at the same rate when sales increase and decrease at the same rate when sales decrease by the same amount.

d.

None of the answers are correct.

Homework Answers

Answer #1
These costs increase more when sales increase than they decrease when sales decrease by the same amount.
A cost is referred to as sticky when it increases at a greater rate with a increase in sales then it decreases with a drop in sales.
Selling, general and administrative costs consists of many fixed costs and mixed costs which are to be incurred irrespective of sales volume.
As a result when sales volume drops these do not decrease much.
Option A is correct
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