Financial terms and calculations Reading

What are fixed costs in a business?

• Costs that change depending on the output of a business

• Costs that do not change, no matter what the level of output

• Costs that are a combination of fixed and variable costs

• Costs that are only related to staffing

How is revenue calculated for a business?

• Revenue = fixed costs + variable costs

• Revenue = selling price × quantity sold

• Revenue = total costs - profit

• Revenue = profit + total costs

What is the break-even point in a business?

• The point where revenue is higher than total costs

• The point where revenue and total costs are the same

• The point where fixed costs are higher than variable costs

• The point where a business makes a profit

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

• Rent

• Insurance

• Raw materials

• Salaries of staff

What does the margin of safety represent in a business?

• The amount sales can fall before reaching the break-even point

• The total profit a business makes

• The difference between fixed and variable costs

• The total revenue a business generates

What is the formula for calculating profit in a business?

• Profit = revenue + total costs

• Profit = revenue - total costs

• Profit = total costs - revenue

• Profit = fixed costs + variable costs