Sticky costs I was looking at a lot of data across a lot of years, companies, and industries and I noticed the following: When sales increased by 10 percent, total operating expenses increased by 9 percent. When sales decreased by 10 percent, total operating expenses decreased by only 5 percent. Maybe this pattern of total operating expenses could be described as "sticky. Costs seemed to readily go up to follow sales, but costs did not decrease as readily when sales fell. Required: 1. Why might costs be sticky? One proposal is that management is optimistic about the future and readily builds capacity for expansion and is reluctant to reduce capacity. Another, perhaps less rational thought, is that management becomes attached to the new (costly) activities and it reluctant to cut it. Finally, another less rational thought is that management engages in empire building" at any opportunity and is reluctant to cut it. Feel free to select from these or suggest your own thoughts based on your experience. 2. What does this mean for our ability to build cost-volume-profit representations for the organization? Comments: There will be no right or wrong response here. Provide a little speculation, based on your experience or intuition about why costs might be sticky