Question detail
RiverRun Catering serves local families while changing supplier; the case evidence includes gross profit margin of ?2,065, sales of 230 units, and a 26% 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
Financial terms and calculations
Question
- A. Use total costs, variable costs, fixed costs to judge gross profit margin, local community impact, and the business objective in Costs, revenue, profit and loss.
- B. Give only a definition of Financial terms and calculations without using the case evidence.
- C. Treat internal and external finance as identical and ignore the effect on local community.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use total costs, variable costs, fixed costs to judge gross profit margin, local community impact, and the business objective in Costs, revenue, profit and loss.
Explanation
The answer is commercially strongest because Use total costs, variable costs, fixed costs to judge gross profit margin, local community impact, and the business objective in Costs, revenue, profit and loss. The case evidence gives ?3,565, 230 units, and 26%, 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 local community, or ignore the business objective.
Common mistake
Costs, revenue, profit and loss 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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