BTEC Unit 2 Finance Assessment

What is a direct cost?

• Costs that increase directly with changes in production or output.

• The costs directly involved in making one product.

• Costs that remain the same regardless of how many items you make or sell.

• Costs other than those involved in making the product.

What is an indirect cost?

• Costs that increase directly with changes in production or output.

• The costs directly involved in making one product.

• Costs that remain the same regardless of how many items you make or sell.

• Costs other than those involved in making the product.

What is a fixed cost?

• Costs that increase directly with changes in production or output.

• The costs directly involved in making one product.

• Costs that remain the same regardless of how many items you make or sell.

• Costs other than those involved in making the product.

What is a variable cost?

• Costs that increase directly with changes in production or output.

• The costs directly involved in making one product.

• Costs that remain the same regardless of how many items you make or sell.

• Costs other than those involved in making the product.

What is a total cost?

• Costs that increase directly with changes in production or output.

• The costs directly involved in making one product.

• Costs that remain the same regardless of how many items you make or sell.

• Costs other than those involved in making the product.

• Fixed Costs + Variable Costs

Which of the following would be a direct cost of a kitchen knife?

• Advertising

• The metal in the blade

• Rent

• Salaries

Which of the following would be a fixed cost of a wood yard?

• Petrol for the van

• Wood

• Electricity

• Salary of office staff

Which of the following would be a variable cost of a bookshop?

• Books

• Rent

• Salaries

• Insurance

What is the formula for working out total costs?

• Fixed Costs + Costs

• Indirect Costs:+ Variable Costs

• Direct Costs =Variable Costs

• Fixed Costs + Variable Costs

How would you describe a start-up cost?

• These are the variable costs of a business.

• These are the costs of a business.

• These are costs which must be met after

  the business can start selling any products.

• These are costs which must be met before

  the business can start selling any products.