Understanding Costs and Revenue

What is a fixed cost?

• A cost that changes with the level of output.

• A cost that remains constant regardless of the level of output.

• A cost that only occurs once.

• A cost that decreases as production increases.

Which of the following is an example of a variable cost?

• Rent for a factory.

• Salaries of permanent staff.

• Raw materials used in production.

• Insurance premiums.

If a company sells 100 units of a product at £5 each, what is the total revenue?

• £100

• £500

• £50

• £5

Which of the following is NOT a revenue stream for a business?

• Sales of goods.

• Interest from savings.

• Depreciation of assets.

• Service fees.

What is the formula for calculating profit?

• Profit = Revenue + Costs

• Profit = Revenue - Costs

• Profit = Costs - Revenue

• Profit = Revenue × Costs

Which of the following best describes a revenue stream?

• A method of reducing costs.

• A source of income for a business.

• A type of fixed cost.

• A method of increasing variable costs.

If a business has fixed costs of £200 and variable costs of £3 per unit, what are the total costs for producing 50 units?

• £150

• £350

• £200

• £50

Which of the following is an example of a fixed cost?

• Electricity bill based on usage.

• Monthly rent for office space.

• Cost of raw materials.

• Wages for temporary workers.

What happens to total variable costs as production increases?

• They remain constant.

• They decrease.

• They increase.

• They become fixed.

If a company has a revenue of £1000 and costs of £750, what is the profit?

• £250

• £750

• £1000

• £1750