Unit 3.3

(a)   Costs that do not change with the amount of goods or services produced nd are paid regardless of any businesses activity the firm engages in.

Total costs are the summation of fixed costs and variable costs

• True

• False

Indirect costs are costs that have both fixed and variable components.

• True

• False

Direct costs are expenses that can be directly traced to a particular product or department.

• True

• False

Total profit is the income gained from the sale of goods and services.

• True

• False

Available revenue streams to businesses include rental income, sale of fixed assets, dividends, interest on deposits, grants and subsidies.

• True

• False

A surfboard producer has variable costs of $420 per unit and sells each one for $500. The fixed costs are $12,000 per month. How many surfboards does the firm need to sell each month in order to break-even?

• 150

• 80

• 200

• 149

Which of the following is used to calculate break-even?

• Total revenue divided by contribution per unit

• Variable costs divided by contribution per unit

• Fixed costs divided by contribution per unit

• Price per unit – variable cost per unit

Safety (a)   is the numerical difference between how much a business sells and its break-even quantity.

The value of goods and/or services sold to customers. It is calculated using the formula: Price × Quantity. and it is the (a)