Question

In an efficient operation how can a reduction in FC be accomplished?

a. Increase production capacity
b. Decrease variable costs
c. Implement cost-cutting measures
d. Expand market share

Answer 1

In an efficient operation, a reduction in fixed costs (FC) can be accomplished through strategies such as implementing cost-cutting measures, decreasing variable costs, and expanding market share.

Step-by-step explanation:

In an efficient operation, a reduction in fixed costs (FC) can be accomplished through various strategies:

1. Implement cost-cutting measures: The company can analyze its expenses and identify areas where costs can be reduced, such as minimizing waste, optimizing the supply chain, or renegotiating contracts with suppliers.
2. Decrease variable costs: By finding ways to lower the variable costs associated with production, such as raw materials, labor, or energy, the company can achieve a reduction in fixed costs.
3. Expand market share: Increasing the company's market share can lead to higher sales volume, which can help distribute fixed costs over a larger revenue base, resulting in a lower fixed cost per unit of production.

By implementing these strategies, an efficient operation can achieve a reduction in fixed costs, improving its overall financial performance.