Cost Concepts Quiz

What are fixed costs?

• Costs that change with output

• Costs that do not change with output

• Costs that vary with the number of units sold

• Costs that are only incurred once

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

• Rent

• Insurance

• Raw materials

• Loan interest

How can fixed costs be adjusted for smaller time periods?

• By multiplying by the number of months

• By dividing by the number of months

• By adding a percentage increase

• By subtracting a percentage decrease

What is the formula for total variable costs?

• Fixed costs + Variable costs

• Variable cost per unit × Number of units sold

• Total costs - Fixed costs

• Fixed costs ÷ Number of units sold

What is revenue?

• The total amount of income generated by an enterprise from its activities.

• The total costs incurred by a business.

• The profit made after all expenses are deducted.

• The number of products sold by a business.

How can revenue be calculated?

• Selling price per unit × Number of sales (sales volume).

• Total costs × Number of sales.

• Selling price per unit + Total costs.

• Number of sales ÷ Selling price per unit.

What is profit?

• Revenue minus total costs.

• Total costs plus revenue.

• Revenue divided by total costs.

• Total costs minus revenue.

What is the formula for calculating the break-even point?

• Break-even = Fixed costs / (Selling price + Variable cost per unit)

• Break-even = Fixed costs / (Selling price - Variable cost per unit)

• Break-even = (Fixed costs + Variable cost per unit) / Selling price

• Break-even = (Fixed costs - Selling price) / Variable cost per unit

In the break-even chart, what does the green line represent?

• Total costs

• Fixed costs

• Revenue

• Break-even point

What is the significance of the break-even point on a graph?

• It shows the maximum profit a business can make.

• It indicates where total costs and total revenue meet.

• It represents the total fixed costs of a business.

• It shows the variable costs per unit.