Negative Fixed Costs (LO3)

“This is crazy!” exclaimed the production supervisor as he reviewed the work of his new assistant.

“You and that computer are telling me that my fixed costs are negative! Tell me, how did you get these negative fixed costs, and what am I supposed to do with them?”

Required Explain to the supervisor the meaning of the negative “fixed costs” and what can be done with them.

 (p. 74)