The fixed costs of a business are textsterling300, 000 per year and variable costs are textsterling2.00 per unit.The business sells 200, 000 units per year at a selling price of textsterling5.00. The profit made per year is:

BUSINESS PLAN DEVELOPMENT

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The fixed costs of a business are £300, 000 per year and variable costs are £2.00 per unit.The business sells 200, 000 units per year at a selling price of £5.00. The profit made per year is:

A	£300, 000
B	£600, 000
C	£1, 000, 000
D	£1, 500, 000

Explanation:

Detailed explanation-1: -First, add up all of your production costs. Make sure to be clear about which costs are fixed and which ones are variable. Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.

Detailed explanation-2: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.

Detailed explanation-3: -What Is the Difference Between Fixed Cost and Variable Cost? In accounting, fixed costs are expenses that remain constant for a period of time irrespective of the level of outputs. Variable costs are expenses that change directly and proportionally to the changes in business activity level or volume.

There is 1 question to complete.

ENTREPRENEURSHIP

ENTREPRENEURIAL PLANNING

BUSINESS PLAN DEVELOPMENT