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    Converting fixed costs to variable costs

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    A member of your team emailed you and stated that she believes Claire's Antiques should work to convert the fixed costs to variable costs. However, she wants to know if this is a good idea. Why or why not? If not, then when would it be a good idea? Reply to your friend with the answers to her questions. In your reply, identify the types of costs Claire's Antiques would probably incur that are fixed.

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    Solution Preview

    Fixed costs are the costs you incur no matter how many people you serve or projects you complete, such as rent, utilities, compensation for full-time salaried employees, and so on. Variable costs go up or down based on your level of activity.

    You can convert fixed costs into variable costs by ...

    Solution Summary

    Conversion of fixed costs to variable costs is explained.