2. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Example question Topic 1.1 Spotting a business opportunity

3. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 1: Read just the question Question Which of the following is an example of a variable cost for a pizza takeaway?

4. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 2: Try to answer the question Question Which of the following is an example of a variable cost for a pizza takeaway? Think: What is the definition of a variable cost? Try: Jot down some examples of variable costs.

5. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 3: Look at the answer options Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper.

6. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 3: Look at the answer options Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. 1. Look at each answer option and think through the key element in relation to the definition you have rehearsed (i.e. rent, ingredients, insurance and advertising).

7. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 3: Look at the answer options Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premisesvariable or fixed? b) Cost of ingredients such as pizza basesvariable or fixed? c) The insurance for the delivery vanvariable or fixed? d) Cost of advertisement in a local papervariable or fixed? 2. Go through each option and note at the side whether you think it is a variable cost or a fixed cost.

8. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Rent is a fixed cost; it has to be paid regardless of the number of pizzas produced or sold.

9. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Rent is a fixed cost; it has to be paid regardless of the number of pizzas produced or sold.

10. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Insurance is also a fixed cost – businesses have to pay insurance costs for fire, theft, public liability etc, regardless of the number of pizzas produced.

11. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Insurance is also a fixed cost – businesses have to pay insurance costs for fire, theft, public liability etc, regardless of the number of pizzas produced.

12. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Advertising is a fixed cost; it does not depend on the amount produced – if the pizza takeaway spends £1000 on a set of leaflets advertising its pizzas it will have to pay this amount even if, as a result, it does not sell any extra pizzas.

13. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 4: Eliminate the distractors Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises. b) Cost of ingredients such as pizza bases. c) The insurance for the delivery van. d) Cost of advertisement in a local paper. Advertising is a fixed cost; it does not depend on the amount produced – if the pizza takeaway spends £1 000 on a set of leaflets advertising its pizzas it will have to pay this amount even if, as a result, it does not sell any extra pizzas.

14. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 5: Arrive at the correct answer Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises b) Cost of ingredients such as pizza bases c) The insurance for the delivery van d) Cost of advertisement in a local paper Ingredients are a variable cost – the more pizzas the takeaway make, the more pizza bases and toppings they require. The cost of bases and ingredients rises as the number of pizzas produced increases. The cost of ingredients are dependent on the amount produced and so represent a variable cost.

15. © Pearson Education 2010 Edexcel GCSE Business Unit 1 Exam Preparation Step 5: Arrive at the correct answer Question Which of the following is an example of a variable cost for a pizza takeaway? The answer options a) Rent of business premises b) Cost of ingredients such as pizza bases c) The insurance for the delivery van d) Cost of advertisement in a local paper