AutoCorp Is a Reputed Automobile Manufacturer While SUVmart Is an Independent

question 30

Multiple Choice

AutoCorp is a reputed automobile manufacturer while SUVmart is an independent distributor who buys automobiles from the former.During the current year,SUVmart wants to buy 250 Rhinos from AutoCorp who wants to charge an upfront franchise fee.The franchise fee charged by it:

• A)can be anything below MC so as to guarantee SUVmart's profits.
• B)can be anything above MC so as to guarantee some profits for AutoCorp.
• C)has to be equal to TC so that AutoCorp breaks even on the deal.
• D)has to be equal to MC.

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Definitions:

Profit and Loss

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.

Complex Businesses

Enterprises that operate in multiple industries or markets, have various products or services, and face multifaceted management challenges.

Balance Sheet

A financial statement that displays a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Double-entry Bookkeeping

A bookkeeping method in which each transaction is entered twice, with one entry being recorded as a debit in one account and a corresponding credit in another.