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Distinctions between fixed and variable costs are important. As activity increases, total variable costs increase, but fixed costs remain the same. This is accurate within
Distinctions between fixed and variable costs are important. As activity increases, total variable costs increase, but fixed costs remain the same. This is accurate within the relevant range. Activity changes outside the relevant range can result in increases in either fixed or variable costs. Describe how an aviation firm distinguishes between fixed and variable costs. Provide specific examples. In addition, explain whether fixed cost items or variable cost items get any priority in your firms internal decisions to distribute available funds.
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