2.02 Operating Costs

Match the following

• Operating Costs

• Operating costs that do not increase or decrease with changes in production

• Fixed Costs

• A one-time purchase a business makes (e.g., land, building, equipment)

• Capital Expenditure

• The ongoing, day-to-day expenses of running a business that are not directly related to production

• Breakeven Point

• The point at which a business’s total sales equal total expenses

• Variable Costs

• Operating costs that fluctuate with changes in production

Match the following

• Sales Commission

• is an example of variable costs

• Depreciation

• An amount a salesperson earns per sale, either a percentage or a flat rate

• Price Markup

• The difference between the total cost of a product and its selling price

• Economies of Scale

• Cost savings created by increased levels of production

• Shipping Supplies

• Loss of value

Rent is a ​ ​ ​ (a)  

• fixed cost.
• varible cost.
• fixed or variable cost.

Advertising is a ​ (a)  

• variable cost.
• fixed cost.
• fixed or variable cost.

A sales commission is a ​ (a)  

• varible cost.
• fixed cost.
• fixed or variable cost.

Property tax is a ​ (a)  

• fixed cost.
• variable cost.
• fixed or variable cost.

Travel expenses are ​ (a)  

• fixed and/or variable.
• fixed cost.
• variable cost.

Employee bonuses are a ​ (a)  

• variable cost.
• fixed cost.

Utilities (water, sewer, gas, ect.) are a​ (a)  

• fixed cost.
• variable cost.

Maintenance (routine such as lawn care and trash removal) is a ​ (a)  

• fixed cost.
• variable costs.
• variable costs
• variable cost.