5.3 Revenue And Costs

Question 1

What is revenue

Answer 1

The money a business receives for selling the goods or services it produces . This is sometimes referred to as sales turnover or total revenue

Question 2

What’s the equation to find the revenue

Answer 2

Sale price (SP) x output or amount sold = revenue

Question 3

What are fixed costs

Answer 3

The costs that don’t change with output e.g. rent

Question 4

How do you find the gross profit

Answer 4

Gross profit = revenue - the cost of sales (VC)

Question 5

How do you find the net profit

Answer 5

Net profit = gross profit - the cost of running the business (FC)

Question 6

What is the total cost

Answer 6

The total cost is the fixed and variable costs of a particular level of production added together

Question 7

What’s the equation for total costs

Answer 7

Fixed costs (FC) + Variable costs (VC) = Total costs (TC)

Question 8

What are variable costs

Answer 8

Costs that change directly with output ie the more they produce the higher the costs

Question 9

How do you find the total variable cost

Answer 9

VC P/U (variable cost per unit ) x output = total variable costs

Question 10

Give some examples of variable costs

Answer 10

• Raw materials
• Packaging
  -Per hour wages

Question 11

Give some examples of fixed costs

Answer 11

-Rent / mortgage payment
- Heating
- Insurance
- Manager wages
- Business rates (tax on property )