Chapter 18: Costs & Revenues

1.

Multiple Choice

30 sec

1 pt

Which 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 Choice

30 sec

1 pt

Which one of the following costs is most likely to be variable for a fast food restaurant?

the salary of the manager

the rent of the restaurant

the cost of the food supplies

the machinery used to cook the food

3.

Multiple Choice

30 sec

1 pt

The 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 Choice

30 sec

1 pt

If 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 Choice

30 sec

1 pt

The best definition of fixed costs are those that do not vary with:

time

seasons

output

number of workers.

6.

Multiple Choice

30 sec

1 pt

The total revenue of a business is:

the same as profit

equal to total costs

quantity of units produced times unit production cost

quantity of units sold multiplied by the sellingprice.

7.

Multiple Choice

30 sec

1 pt

The break-even level of output is that number of units where:

profit is at its highest level

variable costs equal revenue

total costs equal revenue

variable costs equal fixed costs

8.

Multiple Choice

30 sec

1 pt

A product sells for $14. Variable costs are $6.Fixed costs are $120,000. Break-even output is:

15,000 units

120,000 units

40,000 units

we cannot tell from the information given.

9.

Multiple Choice

30 sec

1 pt

The best definition of the contribution made by a product is:

the profit made on each item sold

the revenue gained from selling each item

the difference between price and variable cost

the difference between price and fixed cost

10.

Multiple Choice

30 sec

1 pt

Which 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

30 sec

1 pt

‘A detailed financial plan for the future’ is a definition of which of the following terms?

scatter diagram

sales revenue forecast

a budget

estimate of production costs.

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