Company a and Company B Sell Their Products for Exactly

question 50

Multiple Choice

Company A and Company B sell their products for exactly the same sales price.Both have the same annual fixed costs.Company A's variable and fixed costs at break-even total $60,000 and $30,000 respectively.Company B's variable and fixed costs at break-even total $30,000 and $60,000 respectively.Both companies have the same net income.If both companies experience an increase in sales, which company will have the higher net income?

• A)Company A
• B)Company B
• C)Both companies will report the same profits since total costs are the same.
• D)More information is needed to determine the answer.

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Definitions:

Reinforcement

In behaviorism, a consequence that will strengthen an organism's future behavior whenever that behavior is preceded by a specific antecedent stimulus.

Falsifiable

A criterion for a theory or hypothesis that it can be proven wrong by an observation or a physical experiment.

Falsifiable

The possibility that a hypothesis can be disproven by experimental or observational evidence.

Parsimonious

Describes an approach that is simple or economical in terms of explaining something, often used in the context of scientific theories.