The more the cost base is composed of fixed or indirect costs,the more difficult it is for managers to use cost reduction strategies to protect the organization's profitability in response to decreases in demand for products and services.

Question

Quizplus · Accepted Answer

When the cost base is composed of fixed or indirect costs, it means that these costs cannot be easily reduced in response to decreases in demand. This makes it more difficult for managers to implement cost reduction strategies to protect the organization's profitability. Therefore, the statement is true.

The More the Cost Base Is Composed of Fixed or Indirect