Suppose a Company That Produces Mouthwash Branches Out into Producing

question 149

Multiple Choice

Suppose a company that produces mouthwash branches out into producing toothpaste.If this expansion reduces the average cost per unit, the company must

• A)benefit from vertical integration
• B)benefit from horizontal integration
• C)experience economies of scale
• D)experience economies of scope
• E)have no transaction costs

---

Definitions:

Cash Conversion

The process by which a company turns its inventory or other current assets into cash, often measured through cycles or time periods.

Usable Cash

The portion of cash balances that is readily available for business operations or other immediate use, excluding reserved or allocated funds.

Target Cash Balance

The desired cash balance that a firm plans to maintain in order to conduct business.

Seasonal Patterns

Seasonal patterns are recurring fluctuations in data or activity levels that occur at specific times of the year.