3.2 Costs and revenues

Question 1

Fixed costs

Answer 1

costs that do not change with the amount of goods or services produced

examples: rent

Question 2

Variable cost

Answer 2

costs that change with the number of goods or services produced

Question 3

Semi-variable costs

ONE EXAMPLE

Answer 3

costs comprising both fixed and variable components

wages if overtime is paid extra the overtime is variable

Question 4

Direct cost

Answer 4

costs that can be identified with the production of specific goods or services

example : raw materials

Question 5

Indirect cost

How are indirect cost also called?

TWO EXAMPLES

Answer 5

costs that are not clearly identified with the production of specific goods or services

also called overhead

Examples: office staff salary (administration) , insurance, warehouse

Question 6

Does revenue take into account costs?

Answer 6

NO.
Total revenue is the price per unit times quantity sold .

Revenue, also known as sales revenue or turnover, should not be confused with earnings or profits, which take costs or expenses into account.

Question 7

What is part of a companies revenue besides sales?

Answer 7

Rental incomes (if they let out part of their properties)
Interest on deposit
Grants and subsidies from Government and NGO
every money they receive and book

Question 8

What is the formula for Total Revenue ?

Answer 8

TR = P x Q

Total revenue = price per unit × quantity sold