Bob Nichol and Martha Bohner Own and Operate a Small

question 109

Multiple Choice

Bob Nichol and Martha Bohner own and operate a small company that bakes and sells Thunder Muffins, gigantic muffins full of blueberries, blackberries, or raspberries.They sell the muffins at a local farm that is open to the public on weekends.Since they operate the business as a partnership, they should:

• A)borrow as much as possible
• B)hire an outside consultant
• C)hire a manager to operate the business
• D)seek government assistance
• E)agree to share the business's profits and losses

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, contributing towards covering fixed costs and generating profit.

Financial Break-even

The point at which total revenues equal total costs, resulting in no profit or loss for the business.

Financial Break-even

The point at which total revenues are equal to total operating expenses and financial costs, meaning the company makes no profit but also incurs no loss.

Payback Period

The amount of time required for an investment to generate cash flows to recover its initial cost.