Business Costs

Which of the following would be an example of a fixed cost on a farm?

• Mortgage on the land

• Cost of seed

• Fuel to operate machinery

• Fertilizer

Which of the following is considered a variable cost for a retail business?

• A) Rent for the store

• B) Salaries of permanent staff

• C) Cost of goods sold

• D) Insurance premiums

What is the primary difference between fixed costs and variable costs?

• A) Fixed costs change with production levels, variable costs do not

• B) Variable costs change with production levels, fixed costs do not

• C) Both fixed and variable costs change with production levels

• D) Neither fixed nor variable costs change with production levels

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

• A) Rent

• B) Utilities

• C) Raw materials

• D) Advertising

In the context of business costs, what does the term 'economies of scale' refer to?

• A) Increasing costs as production increases

• B) Decreasing costs as production increases

• C) Costs remaining constant as production increases

• D) Costs fluctuating unpredictably as production increases

Which cost is most likely to be classified as a direct cost?

• A) Factory rent

• B) Office supplies

• C) Raw materials

• D) Marketing expenses

What is the break-even point in business?

• A) When total revenue equals total costs

• B) When total revenue exceeds total costs

• C) When total costs exceed total revenue

• D) When total revenue is zero

Which of the following is a sunk cost?

• A) Future marketing expenses

• B) Past research and development expenses

• C) Upcoming production costs

• D) Future inventory purchases

How does depreciation affect business costs?

• A) It increases cash flow

• B) It decreases cash flow

• C) It is a non-cash expense that reduces taxable income

• D) It is a cash expense that increases taxable income

What is the impact of inflation on business costs?

• A) It decreases costs

• B) It has no effect on costs

• C) It increases costs

• D) It stabilizes costs