Simple cost calculations, pg. 117 - 119

Question 1

What is a variable cost?

Answer 1

Variable costs are costs that vary according to the number of products you make. These costs will also increase as you produce more products.

Question 2

Give 4 examples of variable costs.

Answer 2

1. Telephone
2. Electricity (Only if it is a manufacturing business)
3. Stationery
4. Packaging

Question 3

What is a fixed cost?

Answer 3

Fixed costs are costs in a business that remain the same every month, regardless of how many products or services you produce.

Question 4

What is selling price?

Answer 4

Selling price is the price that the business sells goods or services for.