Cost Analysis in Business Finance

True (A)

Total Costs = Fixed Costs + Variable Costs

<p>$5,500</p> Signup and view all the answers

<p>$12,500 (C)</p> Signup and view all the answers

<p>Rent = A fixed cost that remains constant each month Raw materials = A variable cost that changes with production levels Salaries = A fixed cost relating to employee wages Commission = A variable cost based on sales performance</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>$7,000</p> Signup and view all the answers

<p>$0.50 (C)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Revenue = Price per unit × Number of units sold (C)</p> Signup and view all the answers

<p>$25,200</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>6</p> Signup and view all the answers

<p>Gross Profit and Net Profit</p> Signup and view all the answers

<p>$4,000 (A)</p> Signup and view all the answers

<p>expenditures</p> Signup and view all the answers

<p>Sales Revenue = Money from selling products or services Interest Revenue = Money earned from interest in bank accounts Rental Income = Income from renting or leasing property</p> Signup and view all the answers

<p>Total Sales Revenue (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>$12,000</p> Signup and view all the answers

<p>Reduce costs or expenditures.</p> Signup and view all the answers

<p>Gross Profit = Total Sale Revenue - Cost of Sale Net Profit = Gross Profit - All Expenditures Loss = Expenditures - Revenues Break-even = Revenues = Expenditures</p> Signup and view all the answers

<p>Helps predict availability of finances for new ventures (B)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>The business is healthy and can pay its bills.</p> Signup and view all the answers

<p>inflows</p> Signup and view all the answers

<p>Closing Balance (+) = Business is healthy and can pay its bills. Closing Balance (+++) = Business has enough money to invest in new products. Closing Balance (-) = Business may not be able to pay its bills. Closing Balance (---) = Business is at risk and must take immediate action.</p> Signup and view all the answers

<p>The point where a seller has zero profit and zero loss (D)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Selling price per unit minus variable cost per unit</p> Signup and view all the answers

<p>Contribution Margin</p> Signup and view all the answers

<p>It indicates lower risk of loss (C)</p> Signup and view all the answers

<p>Cash Inflow = Money a business receives Cash Outflow = Money a business pays out Positive Cash Flow = More cash coming in than going out Negative Cash Flow = More cash going out than coming in</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>More cash going out than coming in</p> Signup and view all the answers

<p>The business can pay its bills (B)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Selling goods and services, capital from investors</p> Signup and view all the answers

<p>trouble</p> Signup and view all the answers

<p>Selling goods and services = Primary revenue source for business Capital from Investors = Funds raised through selling shares or loans Bank loans = Borrowed money that incurs interest Grants = Funds that typically do not need to be repaid</p> Signup and view all the answers

<p>Customers may use credit to pay bills (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>outflows</p> Signup and view all the answers

A cost that changes depending on the level of production.

A cost that stays the same regardless of production level.

The sum of fixed costs and variable costs.

A fee paid to a salesperson for a sale.

Money spent by a business.

The sum of all variable costs.

Finding the total cost involves adding fixed and variable costs.

Find variable costs by multiplying the cost of each item by the amount produced.

Total money earned by selling products or services.

Money earned from direct sales of products or services.

The price charged for a single unit of a product or service.

Variable costs multiplied by the number of units produced in a given month.

Total fixed expenses for 6 months plus total variable expenses for 6 months.

The financial gain from a business transaction.

Profit earned after deducting the cost of goods sold from total sales revenue.

The final profit after deducting all business expenses from gross profit.

The point where a business's revenue equals its total expenses (no profit or loss).

The direct costs involved in producing goods or services that are sold.

When a business's expenses exceed its revenue, resulting in a negative profit.

Predicting the money entering and leaving a business over a specific time period.

When more money comes into the business than goes out.

When more money goes out of the business than comes in.

Money coming into the business.

Money leaving the business.

When customers pay for products or services later than agreed upon.

Customers using loans to pay for products or services.

To determine if a business has enough money to pay its bills and avoid financial trouble.

The difference between a business's total cash inflows and total cash outflows during a specific period.

The remaining cash balance at the end of a specific period after accounting for net cash flow.

When a business's cash inflows exceed cash outflows, resulting in a positive net cash flow.

When a business's cash outflows exceed cash inflows, resulting in a negative net cash flow.

The amount of money each unit sold contributes towards covering fixed costs and generating profit. It's calculated by subtracting the variable cost per unit from the selling price per unit.

Divide the total fixed costs by the contribution margin per unit. This gives you the number of units a business needs to sell to reach the break-even point.

The difference between actual sales and the break-even point. It's the buffer zone indicating how much sales can decline before a business starts losing money.

A larger margin of safety indicates a lower risk of loss. The bigger the gap between your current sales and the break-even point, the more sales can decline before a business starts losing money.