The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

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The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

both variable and fixed costs fixed costs and a decrease in variable costs variable costs and a decrease in fixed costs variable costs and no change in fixed costs

Answer : Increase in fixed cost and a decrease in variable costs

Explanation:

In the increased use of automation and less use of the workforce in companies and firms will lead to an increase in the fixed cost of production incurred by the company because acquisition of Machines for production is classified as a fixed cost and a relative decrease in the variable cost of production.

The variable cost of production is the production cost incurred in the production of an additional unit of product produced. since the production is done by automation hence the cost of hiring an additional workforce to produce an additional product will be eliminated (decrease in variable cost)

An increase in fixed costs and a reduction in variable costs of production

Explanation:

Automation is made possible by acquiring state of the art equipment and machines with whooping amount of initial investment.

The knock-on effect of such huge capital outlay is that the firms pursuing such automation strategy records a much higher depreciation costs, which are fixed in nature and also recoverable on each unit of output produced.

However, as fixed costs due depreciation increases, the improved efficiency brought by automation implies that less raw materials would be used as wastage is reduced to the barest minimum, thereby lowering variable cost per unit of output produced.