Jr CEO: Cost Structures

American Airlines innovatively saved $40,000 per year by doing this....

• Putting one less olive in every salad

• Paying their staff less money

• Reducing safety and maintenance checks on their aircraft

• Running more flights per day

Which of these is a strategy for Google to reduce its costs? (Pick all that apply)

• Make searches slower, so they use lesser server capacity

• Make search results faster, improving customer experience

• Stop giving free lunches to their employees

• Reduce its advertising rates for businesses

ClueHunt operates mystery rooms in many cities. It charges people to rent a mystery room by the hour.

Which of these are their fixed costs?

• Rent for the space

• Water bottles given to each customer

• The props in the mystery room

• The security guard outside the rooms

ClueHunt operates mystery rooms in many cities. It charges Rs. 600 per game, for up to 8 people to enter a room.

Which of these strategies can it use to increase revenue? (Tick all that apply)

• Charge more per hour per room

• Only allow 6 people per room

• Reduce the duration of the game

• Reduce the number of staff on-site

A delivery company has 50 trucks, which must constantly travel between City A and City B to make deliveries.

They charge businesses to deliver their packages.

Which of these strategies should the company adopt to break even?

• Charge the highest possible rate per kg (but trucks may run empty)

• Charge the amount it costs to run the trucks

• Charge the lowest possible rate per kg

• Charge nothing initially and gain market share

Jimmy runs an ice cream store and sees a big drop in business during winters. Which of these fixed costs can he convert into variable costs?

(Tick all that apply)

• Ordering lesser ice cream ingredients during the winter

• Renting a smaller shop during the winter

• Reducing the staff during the winter

• Reducing advertising and marketing spend

Which of these is a strategy for reducing fixed costs of a business? (Select all that apply)

• WeWork allows companies to rent office space by seat rather than getting a whole office

• A cloud kitchen charges businesses a fixed amount per year and delivers food monthly

• A laptop rental company which rents out laptops by the day

• A manufacturer who bulk manufactures a minimum of 50,000 uniforms for restaurants

A company is said to break even when....

• Costs > Revenue

• Costs = Revenue

• Costs < Revenue