CAIE IGCSE Business Studies 4.4.1 Identify and Classify Costs Questions

Practise cost-classification questions by defining cost terms, calculating totals and using figures to recommend a product or order.

Exam points

Define fixed costs as costs that do not change with output in the short run.
Calculate revenue, total cost or profit before comparing products or orders.
Justify a cost-based decision using margins, costs, price and case evidence.

[Maximum number: 2]

Tom started ALB 5 years ago making trainers (sneakers) out of sustainable materials such as wool. One of ALB's objectives is to protect the environment. As part of his research, Tom calculated some costs which he could use in his break-even analysis. An extract is shown in Figure 2.1. ALB uses retailers to distribute its products. Tom thinks a successful entrepreneur has to be a good manager.

Fig. 2.1

Define 'variable costs'.

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CAIE IGCSE Business Studies 4.4.1 Identify and Classify Costs Questions question 1