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A company should watch variable costs more, especially if they intend to cut costs or increase profit margins. Fixed costs must be incurred for the business to stay in operation and as the name suggests these costs cannot be varied or eliminated. Variable costs however, can be manipulated for cost effectiveness. Variable costs fluctuate depending on the volume of production and are therefore controllable through such strategies as economies of scale. Therefore more attention must be given to variable costs for better cost control.
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