Please note and in the space below briefly describe which 1

Please note and in the space below briefly describe …which 1 …FC or VC …is easier to reduce? Why?

Jazz Music Shop, Inc. Income Statement For the Year Ended December 31, 2015 Revenues Merchandise Sales Music Lesson Income Total Revenues: 5,000.00 1,400.00 6,400.00 Expenses Salaries Rent expense Depreciation expense Utilities expense Supplies expense Total Expenses: 500 100 234 950 31 1,815.00 Net Income $4,585.00

Solution

Variable cost is easier to reduce

Variable costs vary with production and hence can be reduced, fixed cost on the other hand is sunk cost and it is incurred irrespective of the fact whether any units

is produced or not.Thus it is not related to production

Variable cost is easier to reduce Variable costs vary with production and hence can be reduced, fixed cost on the other hand is sunk cost and it is incurred irrespective of the fact whether any units is produced or not.Thus it is not related to production