Which of these statements best describes profit?
Profit is any revenue left after all costs have been deducted
Profit describes when a business has spent more than its revenue
Profit is where a revenue and costs are the same
What is the correct calculation for revenue?
Revenue = Selling price × Quantity sold
Revenue = Selling price × Fixed costs
Revenue = Quantity sold × Costs of sales
What is a fixed cost?
A cost 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 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 is the correct calculation for break-even?
Variable costs ÷ (selling price − fixed costs)
Fixed costs ÷ (selling price − variable costs)
Selling price ÷ (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
How is a loss shown on a break-even graph?
A shaded area between the revenue and total costs lines below the break-even point
A shaded area between the revenue and total costs lines above the break-even point
It is represented on the Y axis
If a business has fixed costs of £5,600 and variable costs of £1,225, what are the total costs?
£6,845
£5,765
£6,825
If fixed costs are £12,000, the selling price is £5 and the variable cost is £2 per unit, what is the break-even point?
5,000 units
4,000 units
4,500 units