CFD Financial Management & Budgeting 2

Question 1

A floral designer charges $450 for a wedding centerpiece order. The cost of goods (flowers, supplies) is $180. What is the gross profit margin?

Accepted Answer

60%

Answer

Gross profit margin = (Revenue - COGS) / Revenue = ($450 - $180) / $450 = 60%.

Question 2

Which pricing strategy sets prices based on what competitors charge for similar floral arrangements?

Accepted Answer

Competitive pricing

Answer

Competitive pricing sets prices in line with or relative to what competitors charge for comparable products.

Question 3

A floral shop's monthly fixed costs are $3,000 and variable costs per arrangement are $25. If arrangements sell for $75 each, how many must be sold monthly to break even?

Accepted Answer

60 arrangements

Answer

Break-even units = Fixed costs / (Price - Variable cost) = $3,000 / ($75 - $25) = 60 arrangements.

Question 4

What does 'accounts receivable' represent on a floral business's balance sheet?

Accepted Answer

Money owed to the business by customers

Answer

Accounts receivable represents money customers owe the business for goods or services already delivered.

Question 5

A florist wants to increase net profit without raising prices. Which action would most directly achieve this?

Accepted Answer

Reduce overhead expenses

Answer

Reducing overhead expenses directly lowers total costs, which increases net profit when revenue remains constant.

(CFD) Certified Floral Designer Practice Test

(CFD) Certified Floral Designer Practice Test

CFD Financial Management & Budgeting 2