1.6.1 Revenue and Costs — Practice Questions

Six original multiple-choice questions on revenue and costs: sales volume and sales revenue, fixed, variable, total and average costs, and percentage change.

6 questions Edexcel B A-Level Multiple choice Model answers included

Not read the notes yet? Start with the 1.6.1 Revenue and Costs revision notes.

1. 1. A climbing centre charges £15 for an adult session and £9 for a child session. In one week it sells 240 adult sessions and takes £5,400 in sales revenue. The number of child sessions it sold that week was

   Calculation

   Select one answer

   A 120

   B 200

   C 360

   D 600
   Show model answer

   Answer: B (200). Sales volume = sales revenue ÷ price, but only for the revenue that came from child sessions.
   Revenue from adults: 240 × £15 = £3,600.
   Revenue from children: £5,400 − £3,600 = £1,800.
   Child sessions: £1,800 ÷ £9 = 200.

   Why the other options are wrong

   • A — This divides the £1,800 of child revenue by the adult price, £15, instead of the child price, £9.
   • C — This divides all £5,400 by the child price to get 600 sessions, then takes away the 240 adult sessions. Adults paid £15, not £9, so their revenue cannot be converted at the child price.
   • D — This divides the whole £5,400 by £9, as if every session sold were a child session. The £3,600 that came from adults has to be taken off first.

2. 2. A workshop makes wooden chairs. Table 1 shows its costs in two months.
   Using Table 1, the average cost of a chair in May was

   Data interpretation

   Table 1: A chair workshop's monthly costs

   	April	May
   Chairs made	50	80
   Rent	£1,500	£1,500
   Timber	£1,600	£2,560
   Manager's salary	£2,300	£2,300
   Screws, glue and varnish	£400	£640

   Select one answer

   A £40.00

   B £47.50

   C £87.50

   D £140.00
   Show model answer

   Answer: C (£87.50). Average cost = total costs ÷ output.
   Total costs in May: £1,500 + £2,560 + £2,300 + £640 = £7,000.
   Average cost: £7,000 ÷ 80 = £87.50.
   The table also shows which costs are which. Rent and the salary stay the same when output rises, so they are fixed costs (£3,800). Timber and the other materials rise with output, so they are variable costs: £40 a chair in both months.

   Why the other options are wrong

   • A — This is the variable cost per chair alone: (£2,560 + £640) ÷ 80 = £40. Average cost uses total costs, so the rent and the salary must be included.
   • B — This is the fixed costs shared across May's chairs: £3,800 ÷ 80 = £47.50. It leaves out the timber and the other materials.
   • D — This divides May's total costs by April's output: £7,000 ÷ 50. Average cost divides a month's total costs by the output of the same month.

3. 3. A holiday park's sales revenue rose from £200,000 in 2024 to £250,000 in 2025. In 2026 it fell back to £200,000. The percentage fall in its sales revenue in 2026 was

   Calculation

   Select one answer

   A 20%

   B 25%

   C 80%

   D 125%
   Show model answer

   Answer: A (20%). Percentage change = (new value − original value) ÷ original value × 100. For the 2026 change, the original value is the 2025 figure.
   (£200,000 − £250,000) ÷ £250,000 × 100 = −20%, a fall of 20%.
   The rise in 2025 was 25%, but the fall is smaller because it is measured from a bigger starting figure.

   Why the other options are wrong

   • B — This assumes a fall back to the old level must be the same size as the rise before it, or divides the £50,000 change by the new value, £200,000. The 2026 fall is measured against the original value for that year, £250,000.
   • C — This is the new value as a percentage of the original: 200,000 ÷ 250,000 × 100 = 80%. Revenue in 2026 is 80% of the 2025 level, so it has fallen by 20%.
   • D — This divides the original value by the new one: 250,000 ÷ 200,000 × 100 = 125%. It compares the two levels instead of measuring the change, with the wrong figure on the bottom.

4. 4. An escape-room business pays £7,200 a month in rent, insurance and salaries, and each group that plays costs it £5 in props and cleaning. Bookings rise from 400 groups a month to 600. Its average cost per group

   Applied reasoning

   Select one answer

   A Rises, as its total costs are higher.

   B Stays the same, as its variable cost per group is unchanged.

   C Falls, as its total variable costs are lower.

   D Falls, as its fixed costs are spread over more groups.
   Show model answer

   Answer: D (Falls, as its fixed costs are spread over more groups.). Average cost = total costs ÷ output.
   At 400 groups: (£7,200 + 400 × £5) ÷ 400 = £9,200 ÷ 400 = £23.
   At 600 groups: (£7,200 + 600 × £5) ÷ 600 = £10,200 ÷ 600 = £17.
   Average cost falls by £6. The variable cost stays at £5 a group, but the £7,200 of fixed costs is now shared by 600 groups instead of 400, so each group carries £12 of it instead of £18.

   Why the other options are wrong

   • A — Total costs do rise, from £9,200 to £10,200, but output rises proportionately more. Average cost is total costs divided by output, so it falls from £23 to £17.
   • B — The variable cost per group is unchanged at £5, but average cost also includes each group's share of the fixed costs, and that share falls as bookings rise.
   • C — Total variable costs rise, from £2,000 to £3,000, because more groups play. Average cost falls for a different reason: the fixed costs are shared across more groups.

5. 5. The share of a courier firm's parcels that arrive late rises from 8% to 10%. Measuring against the original value, the percentage change in the share of parcels arriving late is

   Calculation

   Select one answer

   A 2%

   B 20%

   C 25%

   D 80%
   Show model answer

   Answer: C (25%). Percentage change = (new value − original value) ÷ original value × 100.
   (10 − 8) ÷ 8 × 100 = 25%.
   When the figures are already percentages, the gap between them is measured in percentage points. The late share has risen by 2 percentage points, which is a 25% increase.

   Why the other options are wrong

   • A — This is the change in percentage points, 10 − 8 = 2. A percentage change divides that by the original value: 2 ÷ 8 × 100 = 25%.
   • B — This divides the change by the new value: 2 ÷ 10 × 100 = 20%. A percentage change is measured against the original value, 8%.
   • D — This is the original as a percentage of the new value: 8 ÷ 10 × 100 = 80%. It compares the two levels instead of measuring the change.

6. 6. Table 1 shows figures for two nail bars in the same month.
   Using Table 1, the correct statement is

   Data interpretation

   Table 1: Two nail bars, one month

   	Price per appointment	Appointments	Total costs
   Nail bar X	£60	300	£14,000
   Nail bar Y	£40	420	£12,000

   Select one answer

   A X has both the higher revenue and the higher profit.

   B X has the higher revenue, but Y has the higher profit.

   C Y has the higher revenue, but X has the higher profit.

   D Y has both the higher revenue and the higher profit.
   Show model answer

   Answer: B (X has the higher revenue, but Y has the higher profit.). Sales revenue = price × sales volume. Profit = revenue − total costs.
   X: revenue 300 × £60 = £18,000; profit £18,000 − £14,000 = £4,000.
   Y: revenue 420 × £40 = £16,800; profit £16,800 − £12,000 = £4,800.
   X takes more revenue, but Y keeps more of its revenue as profit.

   Why the other options are wrong

   • A — X does have the higher revenue, but revenue is not profit. Its costs are £2,000 higher than Y's, which leaves it £800 behind.
   • C — Both halves are the wrong way round. Y's extra appointments do not make up for its lower price, and X's higher revenue is eaten up by its higher costs.
   • D — Y does more appointments, but sales volume is not sales revenue. X's higher price more than makes up for its 120 fewer appointments: £18,000 against £16,800.