The increased use of automation and less use of the work force in companies has caused a trend towards an increase in
A) both variable and fixed costs.
B) fixed costs and a decrease in variable costs.
C) variable costs and a decrease in fixed costs.
D) variable costs and no change in fixed costs.

Question

Quizplus · Accepted Answer

As companies increase their use of automation and rely less on the workforce, their fixed costs are likely to increase due to the cost of purchasing and maintaining machinery or technology. However, their variable costs are likely to decrease since they no longer need to pay for labor costs, such as salaries and benefits. Therefore, the trend is towards an increase in fixed costs and a decrease in variable costs.

The Increased Use of Automation and Less Use of the Work