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- 1. Multiple ChoiceWhich of the following is a reason for managers knowing the costs of the business?They will be able to increase output.It will help them fix the price of the product(s).The information would have to be published to shareholders.Costs will tell the managers what the firm's profits are.
- 2. Multiple ChoiceWhich one of the following costs is most likely to be variable for a fast food restaurant?the salary of the managerthe rent of the restaurantthe cost of the food suppliesthe machinery used to cook the food
- 3. Multiple ChoiceThe best definition of variable costs is:They vary with the number of units produced.They vary over time.They vary with the prices charged by suppliers.They vary with tax rates set by government.
- 4. Multiple ChoiceIf variable costs are $6 per unit,then total variable costs of producing 7,000 units will be:$7,000$70,000$2,100$21,000
- 5. Multiple ChoiceThe best definition of fixed costs are those that do not vary with:timeseasonsoutputnumber of workers.
- 6. Multiple ChoiceThe total revenue of a business is:the same as profitequal to total costsquantity of units produced times unit production costquantity of units sold multiplied by the sellingprice.
- 7. Multiple ChoiceThe break-even level of output is that number of units where:profit is at its highest levelvariable costs equal revenuetotal costs equal revenuevariable costs equal fixed costs
- 8. Multiple ChoiceA product sells for $14. Variable costs are $6.Fixed costs are $120,000. Break-even output is:15,000 units120,000 units40,000 unitswe cannot tell from the information given.
- 9. Multiple ChoiceThe best definition of the contribution made by a product is:the profit made on each item soldthe revenue gained from selling each itemthe difference between price and variable costthe difference between price and fixed cost
- 10. Multiple ChoiceWhich of the following is the best definition of economies of scale?Costs fall as output increases.Costs per unit fall as the firm expands.Average costs rise as the firm expands.Fixed costs fall as output increases.
- 11. Multiple Choice‘A detailed financial plan for the future’ is a definition of which of the following terms?scatter diagramsales revenue forecasta budgetestimate of production costs.
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