Question

A) List one example of a fixed cost that might be considered variable over the long run, and describe why it might be considered variable:

B)

What benefit(s) might result from a customer profitability analysis?

Select one:

a. Establishing payment methods and terms for customers

b. Determining which customers you might wish to keep

c. None of these choices are correct.

d. Verifying orders that were placed have been shipped to customers

e. Identifying top customers by sales and by profits

Answer 1

Solution: -

A) List one example of a fixed cost that might be considered variable over the long run, and describe why it might be considered variable:

The long run is defined as a period in which all INPUTS are variable. Because of that all costs are variable too.

Rent is one of example of fixed cost that might be consider as variable over the long run. Reason is that rent will be increase per year basis so it will be consider as variable on long rung basis.

B) What benefit(s) might result from a customer profitability analysis: -

b. Determining which customers you might wish to keep

Explanation: -

Customer profitability analysis helps in elimination of customers that are costing you money and keeping of customers that will benefit.

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