Both Kate and John Own Saltwater Taffy Factories

question 181

Multiple Choice

Both Kate and John own saltwater taffy factories. Kate's factory has low fixed costs and high variable costs. John's factory has high fixed costs and low variable costs. Currently, each factory is producing 1,000 boxes of taffy at the same total cost. Complete the following statement with the correct answer. If each produces

• A) less, their costs will be equal.
• B) more, their costs will be equal.
• C) more, the costs of Kate's factory will exceed those of John's factory.
• D) less, the costs of Kate's factory will exceed those of John's factory.

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Definitions:

Cash Balance

The amount of cash a company has available at any given time, reflecting the company's liquidity position.

Quality

The degree to which a product or service meets certain standards and satisfies customer expectations.

Income Ratio

A measure used in finance to gauge the proportion of income generated relative to a specific base, such as revenue, investments, or operational costs, providing insight into financial health.

Accounts Payable

Money owed by a company to its suppliers or vendors for goods and services received but not yet paid for.