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Untitled Quiz

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What is the purpose of categorizing expenses into fixed expenses and variable expenses?

  • To determine total expenses
  • To simplify financial reporting
  • To identify areas for cost-cutting (correct)
  • To calculate the ratio of variable expenses to net sales

    • Why are fixed expenses considered different from variable expenses?

  • Variable expenses are always higher than fixed expenses
  • Fixed expenses are easier to control (correct)
  • Variable expenses remain constant over time
  • Fixed expenses change with production levels

    • How does calculating the ratio of variable expenses to net sales help a business?

  • It categorizes expenses based on time periods
  • It identifies fixed expenses accurately
  • It determines the total revenue of the business
  • It helps in assessing profit margins (correct)

    • Which type of expense is more likely to decrease when net sales decrease?

    <p>Variable expenses</p> Signup and view all the answers

    In what situation would a business aim to reduce its fixed expenses?

    <p>When looking to improve its profit margin</p> Signup and view all the answers

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