Question

1)You are planning to start a new day care center for children under the age of 5. As part of the business plan, you need a spreadsheet model that shows your projected revenues and costs. List as many variables as you can that are relevant to that computation.

Which of the following does not belong?

Revenue Related Variables

a) Fees charged per child

b) Fund raisers

c) Donations

d) Salaries

2)You are planning to start a new day care center for children under the age of 5. As part of the business plan, you need a spreadsheet model that shows your projected revenues and costs. List as many variables as you can that are relevant to that computation.

Which of the following does not belong?

Fixed Costs

a) Mortgage

b) Utilities

c) Lunches for children

d) Insurance

e) Salaries

f) Office expenses

Answer 1

Answer to 1st Question:

The correct answer is d - Salaries.

Explanation: Revenue is income or turnover, which is commonly also known as sales for any company. In this question, revenue can be in the form of Fees charged, donations as well as fundraisers but salaries is not a revenue related variable. Salaries for a company is a expense (i.e cost incurred to earn revenue)

Answer to 2nd Question:

The correct answer is c - Lunches for children

Explanation: Fixed cost is a cost incurred which does not change with goods produced or sold. It remains fixed irrespective of changes in production volume or business operations. In this case, lunches for children can not remain fixed, because the cost incurred for lunches for children will vary as per the number of children hence it is not a fixed cost.