#1
What is a fixed cost in business?
A cost that remains constant regardless of production volume
ExplanationFixed costs don't fluctuate with production levels.
#2
Which of the following is an example of a variable cost?
Direct labor wages
ExplanationVariable costs change with production levels, like labor wages.
#3
What is the primary purpose of conducting cost-benefit analysis?
To determine whether the benefits of a project outweigh its costs
ExplanationCost-benefit analysis assesses if benefits outweigh costs to make informed decisions.
#4
What does the term 'marginal cost' represent?
The total cost incurred by producing one additional unit of a good
ExplanationMarginal cost is the cost of producing one more unit.
#5
Which of the following is an example of a semi-variable cost?
Utility bills
ExplanationSemi-variable costs have both fixed and variable components, like utility bills.
#6
What is the difference between explicit and implicit costs?
Explicit costs are monetary payments for resources, while implicit costs represent opportunity costs.
ExplanationExplicit costs involve actual payments, while implicit costs are opportunity costs.
#7
What is the formula to calculate total variable cost?
Total Variable Cost = Variable Cost per Unit * Quantity Produced
ExplanationTotal variable cost is the unit cost multiplied by the quantity produced.
#8
What is the formula to calculate contribution margin ratio?
Contribution Margin Ratio = (Total Sales - Total Variable Costs) / Total Sales
ExplanationContribution margin ratio measures the proportion of sales revenue available to cover fixed costs.
#9
What is the formula to calculate average fixed cost?
Average Fixed Cost = Total Fixed Costs / Quantity Produced
ExplanationAverage fixed cost is total fixed costs divided by quantity produced.