Understanding Business Costs and Revenue

Which of the following is an example of a fixed cost for a small bakery?

• Cost of flour used in baking

• Monthly rent for the shop premises

• Wages paid to part-time staff per hour

• Electricity bill that varies with usage

If a company pays £500 per month for insurance regardless of how much it produces, this cost is best described as:

• Variable cost

• Fixed cost

• Operating revenue

• Startup cost

Which of the following is a variable cost for a clothing manufacturer?

• Annual business rates

• Cost of fabric per shirt produced

• Loan repayment

• Depreciation of machinery

A business pays £2 for each unit produced in materials and £3 per unit in direct labour. If it produces 100 units, what is the total variable cost?

• £200

• £300

• £500

• £100

Which of the following best describes startup costs?

• Costs that increase as production increases

• Costs incurred before a business begins trading

• Costs that remain the same regardless of output

• Costs paid to suppliers for each sale

Which of the following is NOT typically considered a startup cost?

• Market research expenses

• Purchase of initial stock

• Monthly utility bills

• Legal fees for company formation

A business has the following costs: £1,000 rent per month, £2 per unit for materials, and £500 for initial equipment. What is the fixed cost per month (excluding startup costs)?

• £1,000

• £2

• £500

• £1,500

Which of the following is a revenue stream for a gym?

• Monthly membership fees

• Purchase of new exercise equipment

• Staff training costs

• Cleaning supplies

If a business sells 200 units at £5 each, what is its total revenue?

• £1,000

• £200

• £40

• £205

Which of the following is the correct formula for total variable cost?

• Total variable cost = Variable cost per unit × Number of units produced

• Total variable cost = Fixed cost + Variable cost per unit

• Total variable cost = Revenue – Fixed cost

• Total variable cost = Fixed cost × Number of units produced