1.8 Business Revenue and Costs Flashcards
1
Q
What are fixed costs?
A
Costs that stay the same regardless of output
2
Q
What are variable costs?
A
Costs that change depending on value of output
3
Q
What is the formula for average costs?
A
Total Cost / Output
4
Q
What are direct costs?
A
Costs that can be identified by a particular product or process
5
Q
What are indirect costs?
A
Costs that help the whole business
6
Q
What is break even?
A
When a business’s costs meet their revenue and are equal
7
Q
What is the formula for contribution?
A
Selling Price - Variable Cost
8
Q
What is the formula for Breakeven Point?
A
Fixed Costs / Unit Contribution
9
Q
What are some advantages of Break Even analysis?
A
Helps the managers see the effects of any changes in costs e.g. a rise in costs will increase their break even point.
