E OBJ 4.04 MC

Operating costs are also know as ___________

• overhead

• problems

• management

• marketing

When attempting to reduce costs, most businesses will first cut __________ costs.

• operating

• fixed

• production

• variable

Most businesses’ approach to operating costs is to

• keep them as low as possible.

• spare no expense on quality.

• eliminate them completely.

• focus on variable expenses rather than fixed ones.

Which of the following operating costs is most likely to be considered fixed by one business and variable by another business:

• Pest control

• Travel expenses

• Depreciation

• Employee benefits

Which of the following is a true statement regarding operating costs:

• Some may be considered either fixed or variable.

• Businesses spend more on operating costs than production costs.

• They are usually divided into selling expenses and manufacturing expenses.

• Purchasing a piece of equipment is an operating cost.

Sales commissions are a __________ expense.

• variable

• fixed

• capital

• one-time

Operating costs that fluctuate with changes in production are called __________ expenses.

• variable

• fixed

• capital

• total

A business’s rent or mortgage is a __________ expense

• fixed

• semi-fixed

• semi-variable

• variable