Question 1

Total Revenue - ________ = Total Gross Profit

Accepted Answer

A) Total operating costs 
B) Total units sold 
C) Total cost of goods sold 
D) Total materials cost 
A) Total operating costs 
B) Total units sold 
C) Total cost of goods sold 
D) Total materials cost

Question 2

Other variable costs per unit subtracted from Total COGS per unit equals ________.

Accepted Answer

A) Total other variable costs per unit 
B) Contribution margin per unit 
C) Cost of goods sold per unit 
D) Operating profit per unit 
A) Total other variable costs per unit 
B) Contribution margin per unit 
C) Cost of goods sold per unit 
D) Operating profit per unit

Question 3

You should keep reserves of at least ________ and ________.

Accepted Answer

A) 6 months of fixed operating costs,one half of the start-up investment 
B) 3 months of fixed operating costs,3/4 of the start-up investment 
C) One year of fixed operating costs,one half the start-up investment 
D) 3 months of fixed operating costs,one half of the start-up investment 
A) 6 months of fixed operating costs,one half of the start-up investment 
B) 3 months of fixed operating costs,3/4 of the start-up investment 
C) One year of fixed operating costs,one half the start-up investment 
D) 3 months of fixed operating costs,one half of the start-up investment

Question 4

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000.What should the company do?

Accepted Answer

A) Invest - the NPV is greater than $0. 
B) Not invest - the NPV is less than the 10% stated. 
C) Find a way to reduce the initial investment to $1,200,000 and still yield the same amount. 
D) None of the above 
A) Invest - the NPV is greater than $0. 
B) Not invest - the NPV is less than the 10% stated. 
C) Find a way to reduce the initial investment to $1,200,000 and still yield the same amount. 
D) None of the above

Question 5

Inflation has no effect on small business.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would be a start-up cost for an internet business?

Accepted Answer

A) Computers 
B) A URL 
C) Licenses 
D) All of the above 
A) Computers 
B) A URL 
C) Licenses 
D) All of the above

Question 7

The estimated time required to earn sufficient net cash flow to cover the start-up investment is called the repayment period.

Accepted Answer

A) True 
 B)False

Question 8

A prototype ________.

Accepted Answer

A) Is a model or pattern 
B) Serves as an example of how a product would look if it were produced 
C) Serves as an example of how a product would operate if it were produced 
D) All of the above 
A) Is a model or pattern 
B) Serves as an example of how a product would look if it were produced 
C) Serves as an example of how a product would operate if it were produced 
D) All of the above

Question 9

An example of a service business's unit of sale would be one ________ of service.

Accepted Answer

A) Dozen 
B) Hour 
C) Crate 
D) Gross 
A) Dozen 
B) Hour 
C) Crate 
D) Gross

Question 10

One of the most important things an entrepreneur learns is keeping accurate records of the money flowing in and out of a business.Keeping numerical records is called ________.

Accepted Answer

A) Cost analysis 
B) Cash flow analysis 
C) Accounting 
D) Reconciliation 
A) Cost analysis 
B) Cash flow analysis 
C) Accounting 
D) Reconciliation

Question 11

The current value of a proposed investment may be calculated as its ________.

Accepted Answer

A) Internal rate of return (IRR) 
B) Present value (PV) 
C) Net present value (NPV) 
D) Return on investment (ROI) 
A) Internal rate of return (IRR) 
B) Present value (PV) 
C) Net present value (NPV) 
D) Return on investment (ROI)

Question 12

Expenses associated with materials and direct labor for production until the products are sold are called fixed operating costs.

Accepted Answer

A) True 
 B)False

Question 13

The method used to save money that will be needed to replace expensive pieces of equipment is called ________.

Accepted Answer

A) Inventory 
B) Deductible 
C) Depreciation 
D) Amortization 
A) Inventory 
B) Deductible 
C) Depreciation 
D) Amortization

Question 14

Maintaining a cash reserve at start-up is considered to be a poor management practice.

Accepted Answer

A) True 
 B)False

Question 15

Uses for a cash reserve include ________.

Accepted Answer

A) Planned leasehold improvements 
B) Taking advantage of unforeseen opportunities 
C) Routine expenses 
D) Seed capital 
A) Planned leasehold improvements 
B) Taking advantage of unforeseen opportunities 
C) Routine expenses 
D) Seed capital

Question 16

Describe how an entrepreneur should protect his/her financial records.

Accepted Answer

Always keep a copy of your financial rec

Question 17

Jarvis is starting a business requiring initial start-up of $5.5 million.The business is projecting a net cash flow per month of $100,000.How many months will it take to make back his start-up investment?

Accepted Answer

A) 5)5 
B) 55 
C) 20 
D) None of the above 
A) 5)5 
B) 55 
C) 20 
D) None of the above

Question 18

What is the reason to calculate the payback period and the net present value (NPV)for a business investment?

Accepted Answer

Calculating the payback period and the N

Question 19

If a business sells 5,000 units for a total profit of $200,000,what is its profit per unit?

Accepted Answer

A) $400 
B) $50 
C) $40 
D) None of the above 
A) $400 
B) $50 
C) $40 
D) None of the above

Question 20

What is the difference between cash accounting and the accrual method?

Accepted Answer

With the cash accounting method,the only

Exam 12: Understanding and Managing Start-Up, fixed, and Variable Costs

Total Revenue - ________ = Total Gross Profit

Other variable costs per unit subtracted from Total COGS per unit equals ________.

You should keep reserves of at least ________ and ________.

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000.What should the company do?

Inflation has no effect on small business.

Which of the following would be a start-up cost for an internet business?

The estimated time required to earn sufficient net cash flow to cover the start-up investment is called the repayment period.

A prototype ________.

An example of a service business's unit of sale would be one ________ of service.

One of the most important things an entrepreneur learns is keeping accurate records of the money flowing in and out of a business.Keeping numerical records is called ________.

The current value of a proposed investment may be calculated as its ________.

Expenses associated with materials and direct labor for production until the products are sold are called fixed operating costs.

The method used to save money that will be needed to replace expensive pieces of equipment is called ________.

Maintaining a cash reserve at start-up is considered to be a poor management practice.

Uses for a cash reserve include ________.

Describe how an entrepreneur should protect his/her financial records.

Jarvis is starting a business requiring initial start-up of $5.5 million.The business is projecting a net cash flow per month of $100,000.How many months will it take to make back his start-up investment?

What is the reason to calculate the payback period and the net present value (NPV)for a business investment?

If a business sells 5,000 units for a total profit of $200,000,what is its profit per unit?

What is the difference between cash accounting and the accrual method?

Entrepreneurs Recognize Opportunities

Franchising

Finding Opportunity in an Existing Business

The Business Plan: Road Map to Success

Creating Business From Opportunity

Exploring Your Market

Developing the Right Marketing Mix and Plan

Pricing and Credit Strategies

Integrated Marketing Communications

Marketing Globally

Smart Selling and Effective Customer Service

Using Financial Statements to Guide a Business

Cash Flow and Taxes

Financing Strategy: Debt, equity, or Both

Addressing Legal Issues and Managing Risk

Operating for Success

Location, facilities, and Layout

Human Resources and Management

Leadership and Ethical Practices

Franchising, licensing, and Harvesting: Cashing in Your Brand

Filters

You should keep reserves of at least and .