Cost Analysis

What are fixed costs?

• Expenses that increase with sales

• Expenses that are not related to sales

• Costs that are variable

• Cost that do not change

Give an example of a fixed cost.

• Utilities

• Rent

• Salaries

• Advertising

What are variable costs?

• Expenses that change in proportion to the activity of a business

• Costs that are not related to the business activity

• One-time costs that do not change

• Fixed expenses that remain constant regardless of business activity

Give an example of a variable cost.

• Raw materials

• Salaries of permanent employees

• Rent for office space

• Cost of machinery

How do you calculate total cost?

• Ignore the individual costs

• Subtract the costs

• Multiply the individual costs

• Add all the costs

If the fixed cost is 500dhs and the variable cost per unit is 100dhs, and 150 units are produced, what is the total cost?

• 1000 dhs

• 2000 dhs

• 500 dhs

• 600 dhs

If Salary is 5500dhs, Rent 4000dhs and Raw material is 700dhs, what is the total fixed cost?

• 7500dhs

• 9500dhs

• 8000dhs

• 4700dhs

Identify the fixed cost in the following scenario: A company pays 2000 dhs per month for rent.

• Salary

• Utilities

• Rent

• Advertising

Which one is NOT a variable cost?

• Raw material

• Electricity

• Salary

• Water

A company has a variable cost of 3000dhs and made 50 abayas. What is the Variable Cost Per Unit?

• 30

• 40

• 50

• 60