Business Questions and Answers

Profit and Cost Analysis

You have been asked to cater a buffet for 100 people at $20 per person. Your variable costs average 50% and fixed costs are $500. Would you accept the deal?a. No, average check is too high.b. Never. I would be selling below total costs.c. Never, because the operating income is negative.d. Yes, contribution margin is positive.1. A business reported net income of $50,000, declared and paid $50,000 in cash dividends and the ending balance of retained earnings is $50,000. The beginning balance of retained earnings wasa. $100,000b. $250,000c. $50,000d. None of the answers above are correct2. You have been asked to cater a buffet for 100 people at $15per person. Your variable costs average 50% and fixed costs are $1500. Operating income will bea. Negative $500b. Positive $5,000c. $50,000d. None of the answers above are correct3. If quantity of labor (L) is 6 and total product (TP) is 36, marginal product (MP) equalsa. 6b. 2c. 36d. Unknown, more information is needed4) A single proprietorship is a form of business organization which A) has one owner-manager who is personally responsible for the firm's actions and debts.B) has a single owner but has directors who are responsible for the firm's debts.C) has limited liability.D) has unlimited access to money capital.5) A limited partnership differs from an ordinary partnership byA) having a limited number of partners.B) having a limited number of customers

C) including some partners whose liability is restricted to the amount that they invested in the firm.D) having unlimited liability for all partners.6) Churches, the YMCA, the Salvation Army, and the Nature Conservancy are examples ofA) single proprietorship.B) partnership.C) non-profit organizations.D) limited partnership.7) It is assumed in standard economic theory that a firm makes decisions in an effort to A) become as large as possible.B) have a highly diversified product.C) be favoured politically.D) maximize its profit