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Computer Chapter 7 : Test # 4
1 / 15
A student starts a candy-making business and records the cost of sugar, chocolate, packaging, workers' wages, electricity, and shop rent before deciding the selling price. His teacher explains that considering all these expenses prevents financial loss and helps maintain profitability.
Reasoning: Entrepreneurs must calculate all production costs before fixing a selling price.
2 / 15
A candy manufacturer buys sugar, chocolate, flavorings, and food coloring for every production batch. These expenses increase whenever production increases and are directly linked to making each unit of candy.
Reasoning: Raw materials are direct production costs included in the Cost of Goods Sold (COGS).
3 / 15
Two entrepreneurs sell identical chocolates. One carefully includes the cost of wrappers and boxes in product pricing, while the other ignores packaging expenses. After several months, the second entrepreneur earns much lower profits than expected.
Reasoning: Packaging is a direct cost and must be included when calculating the total unit cost.
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A business owner calculates workers' wages for mixing ingredients, cooking candies, and packing finished products. He then divides the total wages by the number of candies produced to determine labor cost per unit.
Reasoning: Labor cost is calculated by distributing total wages over the units produced.
5 / 15
A startup producing candies uses electricity, water, and cooking gas during production. Instead of charging the entire monthly utility bill to one product, the entrepreneur calculates the utility expense for each candy produced.
Reasoning: Utilities are overhead costs that should be calculated on a per-unit basis.
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An entrepreneur pays monthly rent for the factory, renews business licenses annually, and accounts for equipment losing value over time. These expenses remain even if production temporarily decreases.
Reasoning: Rent, depreciation, licenses, and insurance are fixed costs.
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A business calculates the following cost per candy: Raw materials Rs. 51, Packaging Rs. 20, Labor Rs. 0.30, Utilities Rs. 0.05, and Fixed Cost Rs. 1.00. Before deciding the selling price, what should be calculated first?
Reasoning: All production costs must be added to determine the total cost per unit.
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The total production cost of one candy is Rs. 72.35. The entrepreneur wants to earn a 50% markup before selling it in the market. Which pricing strategy is being applied?
Reasoning: Cost-plus pricing adds a markup percentage to the production cost.
9 / 15
Two candy businesses produce products of similar quality. One company sets an extremely high selling price without studying customer demand or competitors. As a result, sales decrease despite having a high profit margin.
Reasoning: Selling prices should balance costs, competition, and customer demand.
10 / 15
A candy manufacturer offers discounts to wholesalers purchasing large quantities. Although the profit per candy decreases slightly, total sales increase significantly while the business remains profitable.
Reasoning: Bulk discounts can increase overall sales while maintaining acceptable profits.
11 / 15
Before launching a premium chocolate brand, an entrepreneur studies competitors' prices, identifies the target customers, and compares market demand before deciding the final selling price.
Reasoning: Market research helps entrepreneurs set competitive and realistic prices.
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A business forecasts selling 1,000 candies per month. Using estimated revenue and production costs, the entrepreneur predicts future profits and checks whether the business will generate enough cash to continue operating successfully.
Reasoning: Profit forecasting and cash flow analysis help entrepreneurs evaluate future financial performance and sustainability.
13 / 15
A new entrepreneur wants to earn investors' trust. During the presentation, she introduces her management team, explains the company's organizational structure, and discusses both short-term objectives and long-term expansion plans.
Reasoning: The "You and Your Startup" section explains the company, team, hierarchy, vision, and goals.
14 / 15
A college student wants to start an online business with very limited investment. He considers creating educational videos, blogging, affiliate marketing, and website development instead of opening a costly physical store.
Reasoning: Blogging, YouTube, affiliate marketing, and website building are common small business ideas for beginners.
15 / 15
An entrepreneur is preparing a complete business plan. Which sequence correctly represents the major planning process from beginning to end?
Reasoning: The major steps include Executive Summary, You & Your Startup, Market Analysis, Products/Services, Target Market, Promotional Strategy, and Budget.
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