Question

What has 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.

Answer 1

B) fixed costs and a decrease in variable costs.

Step-by-step explanation:

Automated robots used in factories are extremely expensive, but once they are functioning, they can replace a lot of workers and they are very cheap to keep working. Factories that once had thousands of employees now only employ a handful of maintenance and programmers that keep the robots running. even though the robots cost millions of dollars, they operating costs are extremely low, which means they are extremely efficient.

The factory's fixed costs increase due to the high cost of the robots, but the monthly variable costs (specially labor) plummet.

Answer 2

b. fixed costs and a decrease in variable costs.

Step-by-step explanation:

As decrease in work force will result in the decline in the variable cost because we pay our labor on the basis of the unit produced or work done. In case of automation work will be shifted to machinery which required a major portion of fixed cost. Increase in automation will lead to Increase in Fixed cost.