Pearson Edexcel International AS Level · Business (XBS11)

Managing finance: Practice Questions

2 multiple-choice questions marked as you go, and 4 written questions with worked solutions. All on Managing finance.

6 questions17 marksFree, no account

Question 1

1 mark

A local manufacturer has total fixed costs of $\$12,000$ per month and variable costs of $\$8$ per unit. If the manufacturer produces $1,500$ units this month, what is the total cost?

Question 2

1 mark

A company is evaluating its profitability for the current financial year. It reported a revenue of $\$500,000$, a gross profit margin of $40\%$, and operating expenses of $\$120,000$. Calculate the operating profit margin for this business.

Question 3

3 marks

A retail business has provided the following figures from its most recent balance sheet:
- Current Assets: $\pounds 85,000$
- Inventory: $\pounds 30,000$
- Current Liabilities: $\pounds 50,000$

Calculate the acid test ratio for this business.

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Question 4

5 marks

A retailer has a current ratio of $1.2:1$ and an acid test ratio of $0.5:1$. If the retailer's current liabilities are $\pounds 40,000$, calculate the value of the inventory held by the business.

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Question 5

3 marks

A company reports a gross profit of $\$120,000$ and cost of sales of $\$80,000$. Calculate the gross profit margin for this business.

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Question 6

4 marks

Case Study: FreshBake Ltd
FreshBake Ltd is a small bakery that has recently expanded its operations. The owner is reviewing the business's financial performance using the following data for the last month:
- Sales Revenue: $\pounds 25,000$
- Opening Inventory: $\pounds 3,000$
- Purchases during the month: $\pounds 12,000$
- Closing Inventory: $\pounds 5,000$
- Other Operating Expenses: $\pounds 6,000$

(a) Calculate the Gross Profit for FreshBake Ltd.
(b) Calculate the Operating Profit Margin for the business.
(c) Explain one reason why it is important for the owner to distinguish between Gross Profit and Operating Profit.

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