Cindy Operates Birds-R-Us, a Small Store Manufacturing and Selling 100

question 203

Multiple Choice

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month.Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $2,500.If for some reason Cindy's fixed cost fell to $400, then her:

• A)average fixed costs would increase.
• B)average total costs would decrease.
• C)marginal costs would decrease.
• D)average variable costs would decrease.

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Definitions:

Bad Debt Expense

Bad debt expense is an estimated expense that a company records to cover receivables that are unlikely to be collected, acknowledging these credits as losses.

Accounts Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.

Financial Condition

A description of an entity's financial status, including assets, liabilities, and equity at a specific point in time.

Service Charge

Fees charged for services provided, typically by banks or other financial institutions, which may include account maintenance or transaction fees.