Both Kate and John Own Saltwater Taffy Factories

question 181

Multiple Choice

Both Kate and John own saltwater taffy factories. Kate's factory has low fixed costs and high variable costs. John's factory has high fixed costs and low variable costs. Currently, each factory is producing 1,000 boxes of taffy at the same total cost. Complete the following statement with the correct answer. If each produces

• A) less, their costs will be equal.
• B) more, their costs will be equal.
• C) more, the costs of Kate's factory will exceed those of John's factory.
• D) less, the costs of Kate's factory will exceed those of John's factory.

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Definitions:

Investment Turnover

A measure of the efficiency of a company in using its investments to generate sales revenue.

Sales Dollar

Refers to the total monetary value of all sales transactions within a given period.

Profit Earned

The financial gain obtained after subtracting all expenses, taxes, and costs from the revenue generated from business operations.

Profit Center

A separate business unit or department within an organization that is responsible for generating its own revenue and profits.