What is revenue?
Revenue is money a business pays out
Revenue is any money a business makes from selling products and services
Revenue is the money left after a business has paid off all of their costs
What is the correct calculation for revenue?
Revenue = Selling price x Quantity sold
Revenue = Selling price x Fixed costs
Revenue = Quantity sold x Costs of sales
What is a fixed cost?
A costs that changes depending on the level of output
A cost that doesn't change, no matter what the level of output
A cost that sometimes changes, and sometimes stay the same
What is the correct calculation for total costs?
Fixed costs + variable costs
Fixed costs + revenue
Fixed costs - variable costs
What does average rate of return consider?
The proportion of profit or loss against the cost of an investment
The proportion of products sold when a new product is released
The percentage profit made on each item sold
Which of the following is a limitation of using the average rate of return?
It does not take into account the profitability of different investment options.
It does not account for the value of money over time
It does not show the expected return of an investment
What is the break-even point?
The point at which a business makes a profit
The point at which a business makes a loss
The point at which revenue and total costs are the same, meaning the business makes neither a profit nor a loss
What does the margin of safety show?
The amount sales can fall before the break-even point is reached
The number of sales a business needs to make to break even
The maximum number of sales a business can make
What is the correct calculation for margin of safety?
Actual sales − break-even sales
Projected sales − break-even sales
Actual profit − break-even sales
If the break-even point is 3,250 and the actual sales are 4,560, what is the margin of safety?
1,250 units
1,310 units
1,210 units