1.3.2 Business revenues, costs and profits Flashcards
What is revenue?
the amount of income received from selling goods or services
How do you calculate revenue?
Revenue = Price x Quantity
What is fixed costs and some examples?
costs do not vary in relation to output (overheads) e.g. salary, rent, insurance, advertising
What is variable costs and some examples?
cost changes in relation to output e.g. raw materials, packaging
How do you calculate variable cost?
Variable costs = cost of one unit x quantity produced
What is total cost?
all the costs of a business.
How do you calculate total cost?
total cost = fixed cost + variable cost
What does profit allow a business to do?
- survive
- reinvest for expansion
- reward employees
- generate wealth for owners
What is profit?
when revenue of a business id greater than its total costs.
How do you calculate profit?
profit = sales revenue - cost of sales
What is a loss?
when a businesses revenue is less than their total costs.
What is interest?
the reward of saving and the cost of borrowing
How do you calculate interest(on loans)?
(total repayment-borrowed amount)/borrowed amount x 100
What is break even?
when total revenue = total costs
How do you calculate break even point in units?
fixed cost/(sales price - variable cost)
