Business Cost Analysis Quiz

Test your understanding of cost accounting with questions on fixed, variable, semi-variable costs, formulas, and more. How well do you know business costs?

Practice Learn Test

What is a fixed cost in business?

A cost that remains constant regardless of production volume

A cost that varies proportionally with production volume

A cost that only occurs in the short run

A cost that is directly tied to variable costs

Which of the following is an example of a variable cost?

Rent for a factory building

Insurance premiums

Direct labor wages

Property taxes

What is the primary purpose of conducting cost-benefit analysis?

To calculate the total cost of a project

To determine whether the benefits of a project outweigh its costs

To assess the market demand for a product

To evaluate the quality of a product

What does the term 'marginal cost' represent?

The total cost incurred by producing one additional unit of a good

The fixed cost of production

The average cost per unit

The sunk cost of production

Which of the following is an example of a semi-variable cost?

Raw material cost

Utility bills

Salaries of permanent employees

Depreciation of machinery

What is the difference between explicit and implicit costs?

Explicit costs are easily quantifiable, while implicit costs are difficult to quantify.

Explicit costs are incurred in the short run, while implicit costs are incurred in the long run.

Explicit costs are monetary payments for resources, while implicit costs represent opportunity costs.

Explicit costs are fixed costs, while implicit costs are variable costs.

What is the formula to calculate total variable cost?

Total Variable Cost = Fixed Cost + Variable Cost per Unit

Total Variable Cost = Variable Cost per Unit / Quantity Produced

Total Variable Cost = Variable Cost per Unit * Quantity Produced

Total Variable Cost = Fixed Cost * Quantity Produced

What is the formula to calculate contribution margin ratio?

Contribution Margin Ratio = (Total Sales - Total Variable Costs) / Total Sales

Contribution Margin Ratio = Total Variable Costs / Total Sales

Contribution Margin Ratio = (Total Sales - Total Variable Costs) / Total Variable Costs

Contribution Margin Ratio = Total Sales / Total Variable Costs

What is the formula to calculate average fixed cost?

Average Fixed Cost = Total Fixed Costs / Quantity Produced

Average Fixed Cost = Total Fixed Costs * Quantity Produced

Average Fixed Cost = Total Variable Costs / Quantity Produced

Average Fixed Cost = Total Variable Costs * Quantity Produced