3.3 Costs and Revenue

Question 1

set up costs

Answer 1

items of expenditure needed to start a business such as obtaining suitable premises, machinery, deposits paid to utilities.

Question 2

running costs

Answer 2

ongoing costs of operating the business such as the payment of wages and salaries, insurance and premiums,cost of purchasing stocks

Question 3

cost

Answer 3

cost of production

Question 4

price

Answer 4

refers to amount a product is sold to customer

Question 5

fixed costs TFC

Answer 5

costs a business pays regardless of how much it produces or sells. can change but happens independently of the level of output.
-rent
-interest payments
-advertising expenditure
-market research
-office stationary
-security
-professional accountancy fees

Question 6

Variable costs (TVC)

Answer 6

costs of production that change in proportion with the level of output or sales. as output increases so does TVC

Question 7

Total Cost

Answer 7

TC= TVC(Total variable costs) +TFC(Total fixed costs)

Question 8

Direct costs

Answer 8

cost related to an individual project or particular product

Question 9

Indirect costs

Answer 9

costs that cannot be directly traced to the production or sale of any single product

Question 10

Revenue

Answer 10

money coming into the business

Question 11

sales revenue

Answer 11

Sales revenue=price x Quantity sold

Question 12

revenue streams

Answer 12

-advertising revenue
-transaction fees
-franchise costs and royalties
-sponsorship revenue
-subscription fees
-merchandise
-interest earning
- donations
-subsidies