During the Course of a Week, McDonald's Has Enough Time

question 1

Multiple Choice

During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not have enough time to expand its kitchen or add an additional seating area. In this situation, McDonald's:

• A) has no fixed costs.
• B) is in the short run.
• C) suffers an economic loss.
• D) earns a large profit.

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Definitions:

Capital Expenditures Budget

A financial plan dedicated to the projected spending on long-term assets that will deliver value in the future.

Sales Budget

An estimation of the revenue expected from sales activities over a certain period, used for financial planning and strategy.

Capital Expenditures Budget

A plan for the funds a company intends to spend on major physical assets, aimed at future benefits or investments.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, typically used to ensure that a company can meet its cash needs.