E II OBJ 2.02 MC

Which of the following statements is true about business start-up requirements:

• The financial needs to start a new business depend on the nature of the venture.

• Purchasing a franchise is usually easy and inexpensive for start-up business owners.

• New business owners usually need to register for patent protection.

• Equipment is the least expensive requirement for start-up business.

Costs of sales for a new manufacturing venture typically include

• trade show attendance, raw materials, and equipment

• internet access, attorney fees, and sales lead lists

• trade show attendance, product inventory, and internet access

• raw materials, equipment, and product inventory

Emotional risks that many entrepreneurs face include

• marital tensions and family problems

• unemployment and uncertain income

• competition and difficult suppliers

• inflation and slow market acceptance

The costs of operating a business are often called __________ expenses

• overhead

• fixed

• variable

• markdown

Variable expenses increase in direct proportion to the increases rate of

• production

• competition

• automation

• motivation

In order for a business to generate a profit, its operating costs must be ___________ the gross margin

• less than

• greater than

• equal to

• identical to

You run a small business that manufactures park benches. A single high-grade bench you offer is made from the following direct costs. What are the total direct costs for manufacturing 940 high-grade benches?

1. Lumber - Oak $7.50

2. Concrete - $1.56

3. Metal screws - $0.75

4. Wood stain - $0.79

5. Direct labor - $10.60

6. Delivery Cost - $6.20

7. Advertising - $1.32

• $26,996.80

• $28,996.80

• $30,996.80

• $35,996.80

The company must pay the following indirect costs regardless of the number of benches produced. What is the total indirect costs for manufacturing 940 high-grade benches?

1. Electricity $130

2. Mortgage $1,084

3. Insurance $480

4. Management Salary $1,893

5. Equipment $843

• $4,430

• $5,430

• $44,300

• $4,164,200

The business sells 940 high-grade benches they have produced at a selling price of $1,250 each. What is the total revenue the business made from the sales?

Formula: Total Revenue = Selling Price x #Units

• $1,175,000

• $4,125,200

• $800,000

• $125,000

Calculate the Gross Profit the company will make:

Sales: $1,175,000

Direct / Indirect Costs of Goods: $26,996.80

Formula: Gross Profit = Sales - Costs of Goods

• $1,148,003.20

• $1,248,003.20

• $2,148.003.20

• $148,003