CUET Entrepreneurship MCQs Unit 5 Business Arithmetic

Question. Monika Ltd. manufactures two types of calculators, Basic Model and Scientific Calculators. The total fixed cost of entire operations is Rs. 1,40,000.

The weighted average contribution will be ________________.
A. Rs. 650
B. Rs. 455
C. Rs. 195
D. Rs. 560

Question. A firm has Capital of Rs. 10,00,000 of which Rs. 6,00,000 is debt fund; Sales of Rs. 5,00,000; Gross Profit of Rs. 2,00,000 and Expenses of Rs. 1,00,000. Return on Equity for the firm will be?
A.50%
B.25%
C.150%
D.30%

Question. The following table shows the number of guests who all stayed in a hotel in last 4 weeks and also their total bill amount for food, lodging and leisure activities.

What is the value of unit price for the hotel?
A. Rs.200
B. Rs.205
C. Rs.208
D. Rs.210

Question. The __________ is the Unit of Sale for multi-product business.
A.Owner
B.Customer
C.Supplier
D.Bank

Question. What will be the Net Working Capital of Sukhoi Ltd. from the given data? Cash Rs. 2,00,000 Account Receivables Rs. 1,50,000 Account Payables Rs. 65,000 Inventory Rs. 3,00,000 Short term borrowings Rs. 1,00,000 Outstanding Salaries Rs. 50,000.
A. Rs. 6, 50,000
B. Rs. 2,15,000
C. Rs. 8,65,000
D. Rs. 4,35,000

Question. Nomee India Ltd.’ are the producers of two different sizes of televisions. From the information given below, calculate the ‘Break-Even Quantity’ of the T.V. sets manufactured per month. Information:

Choose the correct option for Break-even point for the TV sets:
A. 43 inch – 10 units and 55 inch- 12 units
B. 43 inch – 12 units and 55 inch- 10 units
C. 43 inch – 10 units and 55 inch- 10 units
D. 43 inch – 12 units and 55 inch- 12 units

Question. After assuming the future demand, every company needs to determine when to place an order for stock and how much to order. This can be calculated by using the ________ formula.
A.Break-even point
B.Working Capital
C.Reorder Level
D.Economic Order Quantity

Question. Aloma Ayurvedic Limited is a well-established name in the market for ayurvedic medicine. It has entered into the market of immunity booster drinks and has introduced Immunity Shots in special packaging, in two flavours. Total fixed cost incurred in the entire operation is Rs. 5,60,000. Based on the Breakeven point analysis, will it be economically viable for Aloma Ayurvedic Limited to continue with the production of these immunity shots?

A. Yes, as there is a big market for immunity boosting products.
B. No, because there is a limited variety of immunity boosting shots being introduced by the company.
C. No, because the breakeven point is very greater than the combined sale of the two varieties Page 2 of 4
D. Yes, because the breakeven point is smaller than the combined sale of the two varieties.

Question. ASSERTION: The Cash Conversion Cycle is the length of time between a firm’s purchase of inventory and the receipt of cash from accounts receivable.
REASON: The cash conversion cycle for a manufacturing business is higher than a trading concern.
A. Assertion and Reason both are incorrect
B. Assertion and Reason both are correct but not a correct explanation
C. Assertion and Reason both are correct and a correct explanation
D. Assertion is wrong but Reason is correct

Question. If the purchase price is 80% of selling price, and the selling Price is Rs,2,000. Then the gross profit per unit earned by the business is:
A.Rs.1,000
B.Rs.500
C.Rs.1,600
D.Rs.400

Question. 8.The total bill in a restaurant during a week was ₹ 18,000. Though the food bill for individual customer was different but the average bill amount was ₹ 150. Based on this information, the number of customer who ate in that restaurant during the week is
A.90
B.100
C.120
D.140

Question. At BEP, which of the condition is to be fulfilled:
A. Total Revenue = Total Profit
B. Total Profit = Total Cost
C. Total revenue = Total cost
D. Total Revenue = fixed cost

Question. In a subsidiary of Sugar mill in U.P, cane juice is converted into organic jaggery. The mill owner wants to know whether to continue with this subsidiary or close it down. On an average, the monthly output of the subsidiary is 2,500 Kg., Sales price / kg- Rs. 100, Variable cost/ kg- Rs.30, Fixed expenses- Rs. 70,000. The breakeven point in units will be?
A. 1000 units
B. 1500 units
C. 10000 units
D. 7500 units

Question. If procurement or manufacturing lead time is 2 months, and demand during this period is expected to be 300 units per month, then the re order level is:
A.150 units
B.600 units
C.100 units
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D.500 units

Question. Cello Co. ltd manufacturers has three products: Pen, Pencil and Eraser.

Total fixed cost is ₹ 90,000.
From the above given information Overall break even points in units will be:
A. 4,000
B. 2,000
C. 3,000
D. 5,000

Question. Measure of unit in which the products are sold, is called
a) unit cost
b) unit of sale
c) unit price
d) None of these

Answer : B

Question. At break-even level,
a) Total Revenue > Total Expenses
b) Total Revenue = Total Expenses
c) Total Revenue < Total Expanses
d) None of the above

Answer : B

Question. Which of the following is a factor affecting working capital?
a) Scale of operation
b) Seasonal factors
c) Credit allowed
d) All of these

Answer : D

Question. Pareto’s principle is referred to as the
a) ‘80/20’ rule
b) ‘70/20’ rule
c) ‘60/10’ rule
d) ‘50/50’ rule

Answer : A

Question. Which amongst the following is/are example(s) of current liabilities?
a) Debtors
b) Creditors
c) Bills receivables
d) Prepaid expenses

Answer : B

Question. Annual consumption of units in Aahaar Limited = 2,000 units, Buying cost per order = Rs 12, Price per unit = Rs 1,000, Storage cost as percentage of price per unit = 12%, EOQ = ?
a) 400 units
b) 20 units
c) 200 units
d) 100 units
Hint EOQ = √2AC/P
where A = Annual consumption (2,000 units)
C = Buying cost (Rs 12)
P = Storage Cost (Rs 120)

Answer : B

Question. According to ABC analysis, ‘B’ inventory accounts for ……… of the items in terms of quantity.
a) 10-20%
b) 15-25%
c) 40-50%
d) 65-75%

Answer : B

Question. XYZ Company uses 500 units of an item per day and the order lead time is 7 days. Re-order levelwi ll be
a) 1,000 units
b) 500 units
c) 3,500 units
d) None of these
Hint RoL = Usage per Day × Lead Time

Answer : C

Question. Sushant has opened a grocery shop with an investment of Rs 3 lakh. Out of this, Rs 1 lakh was his own and the rest he borrowed from friends and relatives. At the end of the year, he earned a net profit of Rs 40,000. Which ratio will be higher?
a) RoI
b) RoE
c) Both will be the same
d) None of these

Answer : B

Question. Which of the following statements is/are correct?
Statement I Higher the lead time, the lower is the amount of working capital required.
Statement II If the raw material is available freely and continuously, then less working capital is needed as less inventory has to be maintained.
Alternatives
a) Both statements are correct
b) Statement I is correct, but Statement II is incorrect
c) Statement I is incorrect, but Statement II is correct
d) Both statements are incorrect

Answer : C

Question. Investment in all the current assets taken together is called
a) net working capital
b) gross working capital
c) Both (a) and (b)
d) None of these

Answer : B

Question. A business needs capital for
a) procuring fixed assets
b) meeting day-to-day expenses
c) growth and diversification
d) All of the above

Answer : D

Question. A grocery store sold the following items at the price per unit mentioned against each 

The above items were sold to 10 customers. The ‘Unit Price’ would be

a) Rs1,460
b) Rs146
c) Rs100
d) Rs75

Answer : B

Question. During the last month, a total of 450 people took meals in a restaurant and the total billed amount was Rs 90,000. The unit price per person will be
a) Rs 200
b) Rs 475
c) Rs 325
d) Rs 210

Answer : A

Question. ................. is the length of time between the firms purchase of inventory and the receipt of cash from account receivable.
a) Operating cycle
b) Cash conversion
c) Both (a) and (b)
d) None of the above

Answer : C

Question. ................. is an indication of the efficiency with which the operations of the business are carried on.
a) Expenditure
b) Profitability
c) Working capital
d) Inventory

Answer : B

Question. Annual quantity of shirts sold by a shop is 1,200 at the rate of Rs 100/- per month. Cost of placing an order and receiving goods is Rs 500/- per order. Inventory holding cost is Rs 30/- per annum. What is the economic order quantity for the shop keeper?
a) 500 shirts
b) 200 shirts
c) 630 shirts
d) 800 shirts

Answer : B

Question. Which of the following statements is/are correct?
Statement I A transport service provider needs less working capital.
Statement II A service firm sells more on a cash basis and does not have to maintain inventory.
Alternatives
a) Both statements are correct
b) Statement I is correct, but Statement II is incorrect
c) Statement I is incorrect, but Statement II is correct
d) Both statements are incorrect

Answer : A

Question. Amit is running an ‘Advertising agency’ and earning a lot by providing this service to big industries. The working capital requirement of the firm will be ………… .
a) more
b) less
c) Not required
d) Can’t say

Answer : B

Question. Ordering cost and carrying cost are .................related to each other.
a) directly
b) inversely
c) Not
d) Can’t say

Answer : B

Question. ................. indicates the percentage of return on total capital employed in the business.
a) Return on investment
b) Return on equity
c) Re-order quantity
d) None of the above

Answer : A

Question. A company uses 300 units of an item per day and the order lead time is 5 days. What should be the level of inventory when a new order is to be placed?
a) 1,500 units
b) 1,000 units
c) 500 units
d) 2,000 units

Answer : A

Question. Which of the following is an examples of carrying costs for inventories?
a) Money tied up in inventory
b) Storage of inventories
c) Obsolescence cost
d) All of the above

Answer : D

Question. Which of the following statement is false with respect to ABC analysis?
a) ‘A’ includes the items whose annual consumption value is the highest
b) ‘B’ includes the items with a lower consumption value
c) ABC analysis can help you control you inventory better
d) All of the above

Answer : B