Cost Analysis and Scaling Up Quiz

What are fixed costs?

• Costs that remain constant regardless of the scale

• Costs that vary based on market demand

• Costs that change with the level of output

• Costs that are incurred only during production

What is meant by economies of scale?

• Higher fixed costs when scaling up

• Increased labor costs with no benefits

• Increased costs due to larger operations

• Decreased per-unit costs due to higher production volume

What is a potential risk of scaling up operations?

• Improved operational efficiency

• Increased negotiating power with suppliers

• Higher logistics and distribution costs

• Lower per-unit fixed costs

What does capital investment in scaling typically require?

• Hiring more workers

• Increasing fixed costs

• Reducing variable costs

• Investments in new equipment and facilities

What are variable costs?

• Costs that are incurred only during specific periods

• Costs associated with long-term investments

• Costs that change directly with the level of output

• Costs that remain constant regardless of production

What is the formula for calculating profit margin?

• (Revenue / Net Profit) * 100%

• (Revenue - Total Costs) * 100%

• (Total Costs / Revenue) * 100%

• (Net Profit / Revenue) * 100%

What is a key characteristic of fixed costs?

• They vary with production volume

• They are always controllable

• They are unrelated to production

• They remain constant over time

What is a cost-benefit analysis (CBA) used for?

• To determine the depreciation of assets

• To calculate fixed costs

• To evaluate the economic viability of investments

• To analyze market demand

What is the primary focus of value-based pricing?

• Setting prices based on production costs

• Setting prices based on competitor pricing

• Setting prices based on perceived customer value

• Setting prices based on fixed costs

What is the impact of overproduction on costs?

• It increases negotiating power

• It decreases labor costs

• It can lead to higher inventory costs

• It reduces inventory costs