How long does it take for the cost to become variable

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Your firm may have a three year employment contract with the general sales manager. Until the current contract expires, the manager's salary may be a fixed cost for the firm, but this expense becomes variable beyond the term of the current contract. This time-dependent definition of fixed costs also applies to many other expenses, including facilities, equipment, and technology.

Question 1: Please provide an example of a cost that is fixed in the short run but becomes variable over a longer period of time. Approximately how long does it take for this cost to become variable?

 

Reference no: EM132475131

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