Asked by
yin kalay myaing
on Nov 04, 2024
Verified
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.
Fixed Costs
Fixed costs in a business that do not change with the amount of goods produced or sold.
Variable Costs
Costs that change in proportion to the level of production or business activity.
Saltwater Taffy
A variety of soft taffy originally produced and marketed in coastal areas, known for its unique texture and array of flavors.
- Comprehend the principles of fixed, variable, and total expenses.
- Understand the impact of scale of production on cost structures and the concept of diminishing returns.
- Comprehend the tactical significance of cost configurations on company functions and rivalry.
Verified Answer
AG
Learning Objectives
- Comprehend the principles of fixed, variable, and total expenses.
- Understand the impact of scale of production on cost structures and the concept of diminishing returns.
- Comprehend the tactical significance of cost configurations on company functions and rivalry.