1.3.2 - Revenue And Costs Flashcards
Revenue
Income that a business receives from sales
Formula for revenue
Revenue = price x quantity
Income stream
The source of regular income that a business receives
Viable
Capable of working or succeeding
Fixed costs
They are costs which do not vary with the amount that the business produces (i.e. its output),
Variable costs
These are costs which change as output changes.
Total costs =
TFC + TVC
Income statement
Financial statement showing amounts of money and spent in a particular period and the resulting profit and loss
Stakeholder
Anyone who has an interest in the activities of a business, such as its workers, it suppliers the local community and the government
Gross profit
The amount of profit that a business makes on a product or service before the cost of producing and selling that product or service are deducted
Gross profit =
Sales revenue - costs of sales
Net profit
The amount of profit that a business makes on a product of service after the cost of producing and selling the product or service deducted
Net profit =
Gross profit - other operating expenses and interest
Interest =
(Total repayment - borrowed amount) / borrowed amount * 100
Break even point
The point where revenue received meets all of the costs of a business
(The point at which a business’s revenue exactly matches its total costs)
Break even level
The amount of products or services that it must sell to reach this point
Margin of safety
How much sales can fall before the business’s breakeven point is reached again
Margin of safety=
Actual or budgeted sales - break even sales
