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WorksheetsIGCSE Business Studies - 4.2.1 Cost Classification Quiz
Total questions: 25
Worksheet time: 8mins
Which of the following is a fixed cost for a factory producing bicycles?
Paint for the bicycles
Wages for production workers
Rent of the factory
Electricity used in production
Which of the following would be considered a variable cost?
Manager’s salary
Insurance premiums
Cost of raw materials
Factory rent
A company pays $5,000 per month for rent and $2 for every unit produced. What is the total cost of producing 1,000 units?
$2,000
$5,000
$7,000
$10,000
A business has fixed costs of $1,200 and variable costs of $3 per unit. What are the total costs of producing 600 units?
$1,800
$3,600
$2,400
$3,000
If the total cost of producing 500 units is $5,000, what is the average cost per unit?
$5
$10
$15
$20
Which of the following is NOT a reason for classifying costs?
To decide employee bonuses
To calculate profit
To help set prices
To make production decisions
A company has total costs of $12,000 and produces 1,200 units. What is the average cost per unit?
$8
$10
$12
$14
Fixed costs are best described as costs that:
Increase with each unit produced
Stay the same regardless of output
Depend on the number of workers
Only apply in the short term
Which of the following is most likely a semi-variable cost?
Factory rent
Sales commission
Telephone bill
Advertising
A business produces 200 units with total variable costs of $800. What is the variable cost per unit?
$2
$3
$4
$5
A company is deciding between Product A and B. Product A has a lower average cost. Which is the likely conclusion?
Produce Product B
Stop production of both
Produce Product A
Increase prices of both products
A business finds that variable costs are increasing while revenue remains the same. What is the best decision?
Increase production
Lower prices
Find cheaper suppliers
Hire more staff
If the cost of producing a product is higher than its selling price, the business should:
Reduce marketing
Continue production
Increase production
Consider stopping production
Which cost is most useful when choosing a supplier for raw materials?
Total fixed cost
Variable cost per unit
Rent cost
Average cost of administration
A supplier offers two options:
Option A: $5 per unit
Option B: $4.50 per unit plus $100 delivery fee.
What is the cheaper option for 500 units?
Option A
Option B
Both cost the same
Cannot be determined
If the break-even point is not reached due to high fixed costs, a company may decide to:
Increase variable costs
Lower fixed costs
Hire more workers
Reduce prices
Which of these decisions is directly influenced by cost information?
Choosing a marketing strategy
Selecting a business location
Deciding to outsource production
Hiring a new CEO
A bakery is losing money on one of its products due to high ingredient costs. What should it consider?
Decrease production
Increase advertising
Raise staff wages
Expand the product line
A manufacturer is comparing two machines:
• Machine X: Fixed cost $10,000, Variable cost $5 per unit
• Machine Y: Fixed cost $8,000, Variable cost $6 per unit
Which machine is cheaper for 2,000 units?
Machine X
Machine Y
Both are equal
Can’t determine
Which of the following is not a use of cost data in business decisions?
Deciding where to invest profits
Setting product prices
Deciding what to produce
Choosing suppliers
If a business wants to lower its average costs, it could:
Produce fewer units
Reduce fixed costs
Increase advertising
Raise variable costs
A firm has fixed costs of $10,000 and produces 5,000 units. What is the fixed cost per unit?
$0.50
$1
$2
$5
A company’s cost data shows: • Fixed Costs = $4,000 • Variable Costs per unit = $3 If it produces 1,000 units, what is the total cost?
$4,000
$3,000
$7,000
$8,000
Why might a business choose to continue producing a product even if it’s not profitable in the short term?
It increases fixed costs
To cover variable costs and reduce losses
To raise supplier prices
To increase break-even output
A firm is comparing three suppliers. Which factor is most relevant when analysing cost data?
Supplier location
Supplier price per unit
Supplier brand
Supplier advertising
