Question

Ab 3.5 DECISI 3.5 DECISION-MAKING TO IMPROVE FINANCIAL PERFORMANCE MCO TE 12 08 and variable cost per Annual fixed costs are £1.2 million annual output is 150,000 units and unit £15. What are the total annual costs? A £2,400,000 B £3,450,000 C £1,350,000 D £2,250,000 1 mark 09 Which one of these events might lead to a cash flow problem? A Major supplier expands into China B Cost savings achieved on a large contract C Important customer goes into administration D key suppliers extend payment terms 1 mark 10 A key difference between a bank loan and a bank overdraft is that a loan: A Has fixed repayment and interest B Does not have to be repaid in less than two years C is best suited for short-term cash flow needs D Cannot be secured against the assets of the business 1 mark 11 A possible disadvantage of a manufacturer using cheaper raw materials to improve profit is: A Higher staff motivation B Higher productivity C Lower product quality D lower selling prices 1 mark

Answer 1

Fixed Cost Fo= £1.2 million = { 1.2 x 106 Variable cost ve = = = No.of wits & price per unit 15 x 150,000 £ 2,2 su, ovo . Total cost - Fl tave - (£ 3,450,000 O

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