Use the Following to Answer Questions

question 349

Multiple Choice

Use the following to answer questions:
-(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer, her average total cost _____ in the range of output between 100 and 400 cakes.

• A) increases
• B) decreases
• C) remains the same
• D) can't be calculated

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting liquidity.

Cash Dividend

A distribution of a portion of a company's earnings, typically in cash, to its stockholders as a share of the profits.

Long-term Investments

Assets purchased by a company that are intended to be held for more than one year, typically including stocks, bonds, or real estate.

Bonds Payable

Long-term liabilities represented by bonds that a company must repay at a future date, often including periodic interest payments.