Cost Structure – Fixed and Variable

The difference between the selling price of a product and its variable cost is called the contribution margin.That is because that difference goes to paying fixed costs. Once the fixed costs are covered, then profit starts.Cost structure refers to the relationship between variable costs and fixed costs. Do you think it is better to havehigher variable costs and lower fixed costs, or higher fixed costs and lower variable costs? Why did you choosethe structure you did?

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