1.3.2 - Revenue And Costs

Question 1

Costs definition

Answer 1

Spending that occurs to setup + run a business

Question 2

Fixed costs def + example

Answer 2

Costs which don’t change upon output of sales.

Ex: rent, insurance, marketing

Question 3

Variable costs def and example

Answer 3

Costs which change on output.

Ex: Raw materials - packaging

Question 4

Interest def

Answer 4

The cost of borrowing money, in a %

Question 5

Some ways to reduce break even output

Answer 5

• Maximise added value / unit sold
• Negotiate to lower raw material costs
• Reduce fixed costs