A College Student Is Thinking About Running an Ice-Cream Truck

question 129

Multiple Choice

A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?

• A) The cost of ice cream cones
• B) The cost of the truck
• C) The opportunity cost of the student's time
• D) All of these would be included in total cost.

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Definitions:

Operating Leverage

An indicator of the degree to which sales growth affects operational profit, showing the ratio of a company's fixed costs compared to its variable costs.

Interest Expense

The cost incurred by an entity for borrowed funds, often reported on the income statement.

Fixed Operating Costs

Fixed operating costs refer to expenses that do not change in proportion to business activity levels, such as rent, salaries, and insurance premiums.

Earnings Before Interest And Taxes

A measure of a company's profitability that includes income before the deduction of interest payments and taxes.