1.3b Business Revenues , Costs And Profits

Question 1

What is revenue ?

Answer 1

The income that a business receives from sales

Price * quantity = revenue

Question 2

What are the difference between fixed and variable costs ?

Answer 2

Fixed costs : don’t change , no matter how many products or services a business sells
Eg. Tax , rent , salaries , insurance

Variable costs : change depending on how many products or services a business sells
Eg. Electricity bills , raw materials

Question 3

What is the total costs ?

Answer 3

Fixed costs + variable costs = total costs

Question 4

What is profit ?

Answer 4

Total amount of revenue left over after profit have been deducted

Question 5

What is gross profit ?

Answer 5

Amount of profit a business makes on a product or service before the costs of producing and selling the products are deducted

Question 6

What is net profit ?

Answer 6

Amount of profit that a business makes on a product or service after the costs of producing and selling that product are deducted

Question 7

What is break-even point ?

Answer 7

A point which a business revenue exactly matches its total costs