1.3.2 - Business revenues, costs & profits (PART C)

The correct formula to calculate interest on loans as a % is:

• Total repayment – borrowed amount x 100

  Borrowed amount

• Borrowed amount – total repayment x 100

  Borrowed amount

• Total repayment – borrowed amount x 100

  Total repayment

• Borrowed amount – total repayment x 100

  Total repayment

Which one of the following is the correct formula to calculate a firm’s variable cost per unit?

• Total costs/output

• Total variable costs/output

• Output/total costs

• Output/total variable costs

The fixed costs of a business are £300,000 per year and variable costs are £2.00 per unit. The business sells 200,000 units per year at a selling price of £5.00. The profit made per year is:

• £300,000

• £600,000

• £1,000,000

• £1,500,000

The chart below shows the weekly breakdown of total costs for a small business.

• 20%

• 25%

• 80%

• 400%

Which one of the following is the correct formula to calculate total costs?

• Total costs minus total variable costs

• Total fixed costs plus total variable costs

• Total costs plus total variable costs

• Total fixed costs minus total variable costs

Which one of the following variables is often not shown on a break even diagram?

• Total revenue

• Total costs

• Total variable costs

• Output

A business negotiates a bulk buying discount with its suppliers. The immediate effect on the business of this action will be:

• Sales revenue will fall and profits will increase

• Sales revenue will remain the same and profits will increase

• Sales revenue and profits will fall

• Sales revenue will remain the same and profits will fall

A break even diagram for business A is shown here

At 500 units of output, profit is shown as the distance between:

• A and B

• A and C

• A and D

• B and C

A business sells 12,000 units per year. Fixed costs per year are £50,000 and variable costs are £2.50 per unit. The business’s total costs are:

• £30,000

• £54,800

• £62,000

• £80,000

Which of the following best defines the term variable cost? A cost which:

• Stays the same regardless of output

• Changes according to output

• Changes with time

• Are only paid when the business first sets up