As decrease in work force will result in the decline in the variable cost because we pay our labor on the basis of the unit produced or work done. In case of automation work will be shifted to machinery which required a major portion of fixed cost. Increase in automation will lead to Increase in Fixed cost.
Automated robots used in factories are extremely expensive, but once they are functioning, they can replace a lot of workers and they are very cheap to keep working. Factories that once had thousands of employees now only employ a handful of maintenance and programmers that keep the robots running. even though the robots cost millions of dollars, they operating costs are extremely low, which means they are extremely efficient.
The factory's fixed costs increase due to the high cost of the robots, but the monthly variable costs (specially labor) plummet.
It says Liza is risk tolerant, therefore it would make sense that she would hold on to these stocks as risk tolerant people often hold onto stocks in the long term.
Perpetual inventory is a method of accounting for inventory that records the sale of inventory immediately by the use of computerised point of sale systems.
