(3) Revenues, Costs, and Profits

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:

Which two of the following are business key terms that have the same meaning as revenue? Select two answers:

• Income

• Turnover

• Profit

• Cash inflows

• Receipts

Which two of the following would result in a business making a profit? Select two answers:

• The business is operating above its break even point

• The margin of safety is negative

• The business’s total costs are higher than its total revenue

• Total revenue is lower than the business’s total variable costs

• The margin of safety is positive

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

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 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

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

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

• Total repayment - borrowed amount x 100

• Borrowed amount - total repayment x 100

• Total repayment - borrowed amount x 100

• Borrowed amount - total repayment x 100

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

• Total revenue

• Total costs

• Total variable costs

• Output

The chart below shows the weekly breakdown of total costs for a small business. Based on this information, the weekly value of variable costs as a percentage of weekly total costs is:

• 20%

• 25%

• 80%

• 400%