Shuttle program extension?

"Fred J. McCall" wrote in message
...
John Doe wrote:

:Fred J. McCall wrote:
:
: If they scale with flight rates then they are not fixed costs. That's
: not "over-simplification". That's the bloody definition of fixed
: costs.
:
:If they have facilities to support say 12 flights per year, you have
:fixed costs whether you operate 1 or 12 flights that year.
:
:But if you know you won't need more than 3 flights per year, you might
:be able to scale down those facilities and staffing levels and reduce
:your fixed costs. (at which point, your costs would be fixed whether you
perate 1 or 3 flights per year).
:
:Think of it in terms of a factory. If you operate 2 production lines in
:3 shifts, your factory will have equipment and employee costs that are
:fixed whether the factory runs at capacity or below capacity.
:
:But if you are only using 1/6th of the maximum capacity, you could
:shutdown one production line and only hire one shift of employees to
roduce what is needed and your fixed costs would be much lower.
:

Go look up the definition of 'fixed cost'.

If it varies with level of activity, it is a VARIABLE cost.

Let me help you out:

Fixed Cost: Fixed costs are operating expenses that are incurred when
providing necessities for doing business and have no relation to the
volume of production and sales (as opposed to "variable costs").
Examples are rent, property taxes, and interest expense.

Let me help you out Fred.

The fixed costs of my local airport are a LOT lower than JFK. Of course my
local airport handles a lot less passengers than JFK.

So yes, fixed costs CAN vary depending on how you size the program.

John has a point. If you're no longer maintaining say the second OFP
because you plan on a flight rate of 3 a year rather than 12, your fixed
costs WILL change.

Now, you won't be able to reduce your fixed costs by 75% by reducing your
flight rate by 75%. Hell, you might not even be able to reduce it 15%.
But, if you change your assumptions, you can change the fixed costs.



--
"Ignorance is preferable to error, and he is less remote from the
truth who believes nothing than he who believes what is wrong."
-- Thomas Jefferson