3.2 Costs and revenue Flashcards
Examples of business costs
set up costs: premises buildings fixtures and fittings equipment connection and installation of utilities and power
running costs: mortgage/rent and/or lease payments packaging materials repair and maintenance costs depreciation costs utility bills
Fixed costs
costs of production that a business has to pay regardless of how much it produces or sells
Variable costs
costs of production that change in proportion with the level of outputs or sales
Total costs
the sum of all variable costs and and all fixed costs of production
Semi-variable costs
contain an element of both fixed and variable costs
Direct costs
costs specifically attributed to the production or sale of a particular good or service
Indirect costs
costs that do not directly link to the production or sale of a specific product
Revenue
the money coming into the business, usually from the sales of goods and services
Formula to calculate revenue
price x quantity sold
What are ‘revenue streams’?
money that comes into the firm from other means besides sales of goods and services
What are other sources of non-sales revenue for a business?
advertising revenue transaction fees franchise costs and royalties sponsorship revenue subscription fees merchandise dividends donations subventions
