John Diaz owns pacific electric, a large electrical tracting firm that provides services to building construction projects. The company has 2,000 employees and operates in three western states. Recently the company experienced large losses due to a downturn in the economy and a slowdown in construction. John thinks the losses were particulary large because his company has too much fixed assets.
a. expand on johns thoughts. How are the large bosses related to fixed costs?
b. identify a way that john can turn potential fixed costs into variable costs.