Question detail
CycleNest serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?3,720, sales of 840 units, and a 41% change in costs or demand. Which option best applies Calculate average rate of return for business investment projects?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Financial terms and calculations
Question
- A. Use investment, average rate of return to judge capacity utilisation, managers impact, and the business objective in Average rate of return.
- B. Give only a definition of Financial terms and calculations without using the case evidence.
- C. Treat break-even and profit as identical and ignore the effect on managers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use investment, average rate of return to judge capacity utilisation, managers impact, and the business objective in Average rate of return.
Explanation
Choose this response because Use investment, average rate of return to judge capacity utilisation, managers impact, and the business objective in Average rate of return. The case evidence gives ?5,220, 840 units, and 41%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse break-even and profit, miss the managers, or ignore the business objective.
Common mistake
Average rate of return common mistake 1
Giving a vague answer instead of directly addressing: Calculate average rate of return for business investment projects..
Answer by clearly explaining how to calculate average rate of return for business investment projects..
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