Cost structure
A) refers to the relative proportion of fixed versus variable costs that a company incurs.
B) generally has little impact on profitability.
C) cannot be significantly changed by companies.
D) refers to the relative proportion of operating versus nonoperating costs that a company incurs.

Question

Quizplus · Accepted Answer

Cost structure refers to the makeup of a company's costs, specifically the relative proportion of fixed costs (costs that do not vary with changes in output or sales) versus variable costs (costs that do vary with changes in output or sales). This can have a significant impact on a company's profitability, as higher fixed costs can lead to lower profits in times of low sales or output. Companies can work to adjust their cost structure by reducing fixed costs and increasing variable costs as a proportion of total expenses.

Cost Structure