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2 years ago

A company with a high ratio of fixed costs:

Business

1 answer:

garik1379 [7]2 years ago

4 0

Answer:

The correct answer is: more likely to experience a loss when sales are down than a company with mostly variable costs.

Explanation:

The fixed cost ratio is a simple ratio that divides fixed costs by net sales.

The profit formula is:

Profit = Sales- Total cost =(Price * Q)-(FC + VC*Q)

Where

FC=Fixed cost

VC= variable cos t

Q=produce quantity

If sales go down, we have to pay this fixed cost even if we have no sales. So if this Fixed cost are high , is most likely we are going to experience loss

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