108 Revenue, costs and profit Flashcards

1
Q

Revenue (Formula)

A

Money a business makes from sales

Quantity sold x Selling price

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2
Q

Profit (Formula)

A

Amount left after a business subtracts total costs from the revenue they generate from selling products to customers

Total revenue - Total costs

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3
Q

Fixed costs

A

Do not vary with output such as rent and insurance

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4
Q

Variable costs

A

Costs that change in proportion to changes in output. Examples are raw materials and stock

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5
Q

Semi variable stock

A

Costs that include both fixed and variable costs.
Such as employee monthly salary, but extra for overtime

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6
Q

Direct costs

A

Costs identified with the production of a good/service

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7
Q

Indirect costs (overheads)

A

Costs which cannot be matched against each product because they are paid regardless, example is rent

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8
Q

Total costs (Formula)

A

Total Fixed costs + Total Variable costs

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9
Q

Contribution (Formula)

A

Selling price - Variable cost per unit

Shows if products cover own variable costs

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10
Q

Break even (Formula)

A

The point where a business doesn’t make a profit or a loss

Fixed costs / Contribution (Selling price - Variable cost per unit)

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11
Q

Margin of safety

A

How much a producer can reduce output before the business starts to make a profit or a loss

Actual output - Break-even Output

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