ESB Domain 4 Prep

You operate a small insurance office with a partner.

Which expense is a fixed cost?

• Paycheck for an hourly administrative assistant.

• Property lease for the office.

• Water bill for the office.

• Cost of paper supplies.

Which expense is a variable cost?

• Purchase of a new copy machice

• Monthly rent on a store

• Insurance payments

• Hourly wages for an office employee

What is the formula for determining selling prices?

• Selling price = (Cost x Desired profit margin) + Cost

• Selling price = (Cost x Desired profit margin) - Cost

• Selling price = (Cost - Desired profit margin) / Cost

• Selling price = (Cost / Desired profit margin) + Cost

What is the formula for determining equity?

• Equity = Liabilities - Assets

• Equity = Assets - Liabilities

• Equity = Liabilities / Assets

• Equity = Assets x Liabilities

What is the formula for determining net income?

• Net income = Income - Cost of goods sold x Expenses

• Net income = Income x Cost of goods sold x Expenses

• Net income = Income + Cost of goods sold + Expenses

• Net income= Income - Cost of goods sold - Expenses

What is the formula for determining gross profit?

• Gross profit = Income + Cost of goods

• Gross profit = Income - Cost of goods

• Gross profit = Income x Cost of goods

• Gross profit = Income / Cost of goods

What is the formula for determining income tax expense?

• Income tax expense = Gross profit - Tax rate

• Income tax expense = Gross profit x Tax rate

• Income tax expense = Gross profit + Tax rate

• Income tax expense = Gross profit / Tax rate

What is the formula for determining a break-even point?

• Break-even point = Total cost - Product or service sales price

• Break-even point = Total cost / Product or service sales price

• Break-even point = Total cost x Product or service sales price

• Break-even point = Total cost + Product or service sales price

What is the formula for determining ending cash balance?

• Ending cash balance = Total cash / Total costs

• Ending cash balance = Total cash + Total costs

• Ending cash balance = Total cash x Total costs

• Ending cash balance = Total cash - Total costs

What is the formula for determining burn rate?

• Burn rate = Monthly starting balance + Month ending balance

• Burn rate = Month starting balance / Month ending balance

• Burn rate = Month starting balance - Month ending balance

• Burn rate = Month starting balance x Month ending balance