Business Costs Flashcards
What is a start-up cost?
A cost a business pays when starting up a business
Give an example of a start-up cost for a bakery.
Ovens, premises, those little cash machines.
What is an operating cost?
Costs a business has to pay on a regular basis.
Give an example of a running cost for shop that sells skateboards.
Rent, staff wages, skateboards.
What is a fixed cost?
A cost that doesn’t depend on output.
Does a business always pay fixed costs?
Yes, even if the business produces nothing.
Give an example of a fixed cost for a pawnbroker.
Rent, water bills, ‘protection money’ to the mafia, etc
What is a variable cost?
Costs that change when more or a less of an item is produced. Literally a cost that varies. C’mon.
What is the opposite of a fixed cost?
A variable cost.
Give an example of a variable cost for a shop that sells curry, and only curry.
Ingredients, packaging
How do you calculate a variable cost?
cost per unit x number made/sold = variable cost
What is a direct cost?
Expenses that relate directly to making a product.
Give an example of a direct cost for a shop that sells hand-made skateboards.
Staff wages and skateboard parts.
What is an indirect cost?
Costs that can’t be directly related to creating a product.
Give an example of an indirect cost for a Chinese takeaway shop.
Telephone bills, salaries, rent.
