Question detail
Harbour Hire serves small retailers while taking a loan; the case evidence includes capacity utilisation of ?10,990, sales of 760 units, and a 11% change in costs or demand. Which option best applies Distinguish variable costs, fixed costs and total costs?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Business planning
Question
- A. Use variable costs, total costs, fixed costs to judge capacity utilisation, lenders impact, and the business objective in Basic financial terms.
- B. Give only a definition of Business planning without using the case evidence.
- C. Treat internal and external finance as identical and ignore the effect on lenders.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use variable costs, total costs, fixed costs to judge capacity utilisation, lenders impact, and the business objective in Basic financial terms.
Explanation
The option is correct because Use variable costs, total costs, fixed costs to judge capacity utilisation, lenders impact, and the business objective in Basic financial terms. The case evidence gives ?12,490, 760 units, and 11%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse internal and external finance, miss the lenders, or ignore the business objective.
Common mistake
Basic financial terms common mistake 1
Giving a vague answer instead of directly addressing: Distinguish variable costs, fixed costs and total costs..
Answer by clearly explaining how to distinguish variable costs, fixed costs and total costs..
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