Refer to the Following Selected Financial Information from McCormik, LLC

question 189

Multiple Choice

Refer to the following selected financial information from McCormik, LLC. Compute the company's current ratio for Year 2.

• A)2.26.
• B)1.98.
• C)2.95.
• D)3.05.
• E)1.88.

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Definitions:

Average Fixed Costs

The costs of production that remain constant regardless of output level, when divided by the amount of output generated.

Average Fixed Costs

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, which decreases as production increases.

Total Variable Costs

The sum of all costs that vary with the level of output, such as materials and labor, excluding fixed costs like rent or salaries.

Total Costs

The sum of all expenses a business incurs to produce or sell its products or services, including fixed and variable costs.