Question detail
RiverRun Catering serves tourists while improving quality control; the case evidence includes average order value of ?4,156, sales of 171 units, and a 9% change in costs or demand. Which option best applies Calculate and interpret average unit costs?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Expanding a business
Question
- A. Use average unit cost to judge net profit margin, customers impact, and the business objective in Economies and diseconomies of scale.
- B. Give only a definition of Expanding a business without using the case evidence.
- C. Treat revenue and profit as identical and ignore the effect on customers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use average unit cost to judge net profit margin, customers impact, and the business objective in Economies and diseconomies of scale.
Explanation
The option is correct because Use average unit cost to judge net profit margin, customers impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?5,656, 171 units, and 9%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse revenue and profit, miss the customers, or ignore the business objective.
Common mistake
Economies and diseconomies of scale common mistake 1
Giving a vague answer instead of directly addressing: Calculate and interpret average unit costs..
Answer by clearly explaining how to calculate and interpret average unit costs..
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