Understanding Cost and Price

What does cost typically refer to?

• The profit from selling a product

• The expense incurred for making a product or service

• The amount a customer is willing to pay

• The time taken to sell a product

What company is mentioned in the example?

• Ford Motor Company

• Apple Inc.

• Google

• Amazon

What is the cost of parts used to build a car considered as?

• Direct cost

• Indirect cost

• Hidden cost

• Imaginary cost

What is the main topic of the text?

• Direct cost

• Indirect cost

• Traveling

• Cooking

What does the text say about indirect costs?

• They are always related to a product

• They cannot be easily traced to a product

• They are the same as direct costs

• They are not important

What does the term "fixed cost" imply about the cost's behavior?

• It varies with production

• It remains constant over the short term

• It decreases with more production

• It increases with less production

Does the lease payment change with the number of products made?

• Yes

• No

• Sometimes

• Only if production stops

What happens to variable costs when production volume increases?

• They stay the same.

• They decrease.

• They increase.

• They disappear.

In the example, what must a toy manufacturer do before shipping products?

• Paint the toys.

• Package the toys.

• Test the toys.

• Sell the toys.

What type of cost is associated with the number of products a company produces?

• Fixed cost.

• Variable cost.

• Sunk cost.

• Opportunity cost.