Mug Shots Operates a Chain of Coffee Shops

question 68

Multiple Choice

Mug Shots operates a chain of coffee shops.The company pays rent of $15,000 per year for each shop.Supplies (napkins,bags,and condiments) are purchased as needed.The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis.The cost of rent relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost,respectively?

• A) Variable cost and fixed cost
• B) Fixed cost and fixed cost
• C) Fixed cost and variable cost
• D) Variable cost and variable cost

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Definitions:

White Knight

A post-offer technique where a target company invites another suitor to outbid a hostile bidder. The second suitor agrees that it will retain the existing management.

Hostile Bidder

An entity attempting to acquire another firm against the wishes of the target company's management and board.

Friendly Suitor

A company or individual that makes a benign and often consensual offer to buy or merge with another company, as opposed to a hostile takeover.

Public Relations Campaign

A strategic communication process that builds mutually beneficial relationships between organizations and their publics.