Northwind Manufacturing Ltd is a precision engineering company based in Shenzhen that produces specialised automotive components. In 2024, despite increasing production volumes by 45%, several of their fixed costs remained unchanged.
Define the term 'fixed costs'.
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Jakarta Fresh Foods Co produces ready-to-eat meals for supermarkets across Indonesia. The company experienced significant variable cost increases in 2024 as their production doubled to meet growing demand.
State two examples of variable costs.
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Melbourne Motors Ltd, an Australian automotive retailer, tracks various business expenses. Most of its indirect costs cannot be easily allocated to specific vehicles or services they sell.
State two examples of indirect costs.
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Swiss Precision Engineering AG operates a high-tech manufacturing facility in Zurich. The company's management accountant is looking at ways to lower overhead costs.
Define the term 'overheads'.
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Cape Verde Resorts PLC, a luxury hotel chain, earned revenue from a variety of sources in 2024.
State two types of revenue streams.
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Oslo Tech Innovations AS is a Norwegian software company that sold 15,000 licences of its security software in 2024, boosting its sales revenue.
Define the term 'sales revenue'.
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Mexico City Entertainment Corp tracks revenue from ticket sales, merchandise, sponsorships, and concessions at its theme parks.
State two ways to increase sales revenue.
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The Football Association's financial report shows that their revenue comes from multiple sources. Match ticket sales account for 35% of total revenue, while broadcasting rights contribute 45%. The remaining revenue is generated through sponsorship deals, merchandise sales, and licensing agreements with various partners.
Describe one feature of sponsorship as a revenue stream.
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Sunshine Cinemas operates a chain of independent movie theatres offering a mix of mainstream and indie films. The company’s reputation for comfortable seating and unique concessions has drawn a loyal customer base. Recently, Sunshine Cinemas identified an opportunity to open a flagship theatre in a city centre.
The estimated cost of the expansion is £200,000. Sunshine Cinemas plans to fund the project using its existing sales revenue and exploring revenue streams such as renting theatre space for events and selling branded merchandise. Management aims to ensure that the expansion aligns with their brand image while remaining profitable.
Analyse two advantages and one disadvantage to Sunshine Cinemas of renting theatre space for events as a new revenue stream.
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Sunshine Cinemas operates a chain of independent movie theatres offering a mix of mainstream and indie films. The company’s reputation for comfortable seating and unique concessions has drawn a loyal customer base. Recently, Sunshine Cinemas identified an opportunity to open a flagship theatre in a city centre.
The estimated cost of the expansion is £200,000. Sunshine Cinemas plans to fund the project using its existing sales revenue and exploring revenue streams such as renting theatre space for events and selling branded merchandise. Management aims to ensure that the expansion aligns with their brand image while remaining profitable.
Describe two factors Sunshine Cinemas should consider when introducing branded merchandise as a new revenue stream.
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Artisan Ceramics is a small studio that creates handcrafted pottery for retail and wholesale customers. The company’s main product lines include tableware and decorative pieces. Due to increasing demand, Artisan Ceramics is considering expanding its operations by hiring additional staff and upgrading its kiln to a more energy-efficient model.
The studio is also evaluating its cost structure, particularly fixed and variable costs. Management is exploring ways to manage these costs while maintaining product quality and profitability.
Explain one advantage and one disadvantage of increasing fixed costs by upgrading Artisan Ceramics’ kiln.
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Artisan Ceramics is a small studio that creates handcrafted pottery for retail and wholesale customers. The company’s main product lines include tableware and decorative pieces. Due to increasing demand, Artisan Ceramics is considering expanding its operations by hiring additional staff and upgrading its kiln to a more energy-efficient model.
The studio is also evaluating its cost structure, particularly fixed and variable costs. Management is exploring ways to manage these costs while maintaining product quality and profitability.
Analyse two advantages and one disadvantage to Artisan Ceramics of bulk purchasing of materials.
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Nova Apparel is a sustainable fashion brand that designs and sells eco-friendly clothing. The company operates through an online store and pop-up shops at events. To expand, Nova Apparel plans to open a permanent retail store in a major city.
Management is analysing its cost structure to determine the financial feasibility of the expansion. Fixed costs such as rent and salaries for store employees will increase significantly, while variable costs like raw materials will depend on sales volume. Nova Apparel is also considering offering customisation options as a revenue stream to attract more customers.
Explain one advantage and one disadvantage to Nova Apparel of increasing fixed costs by opening a retail store.
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Nova Apparel is a sustainable fashion brand that designs and sells eco-friendly clothing. The company operates through an online store and pop-up shops at events. To expand, Nova Apparel plans to open a permanent retail store in a major city.
Management is analysing its cost structure to determine the financial feasibility of the expansion. Fixed costs such as rent and salaries for store employees will increase significantly, while variable costs like raw materials will depend on sales volume. Nova Apparel is also considering offering customisation options as a revenue stream to attract more customers.
Describe two types of costs Nova Apparel must evaluate when planning the retail store expansion.
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