Business costs and revenue and profit Flashcards
what is the definition of costs ?
costs are spending by the business. costs is the spending that is necessary to set up and run the business.
what is the definition of price ?
a price is the amount that the customer pays to buy a good.
what are 4 different types of costs ?
Fixed costs . Variable costs , semi - variable costs and total costs.
what is the definition of fixed costs
fixed costs are any costs which do not vary directly with output in the short run.
what is an example of a fixed cost ?
Rent
what is the definition of variable costs ?
They are the costs which vary directly with output in the short run.
what do variable costs include ?
They include payments made for the use of inputs such has raw materials and packaging
what is the definition of semi - variable costs /
These are costs which are partially fixed and partially variable.
what is the difference between fixed and variable costs ?
fixed costs :
If more items are made or sold the cost would stay the same.
If it says per week or month
variable costs :
if more items are made or sold the cost would increase.
If it says per unit such as per sandwich , pizza , per t shirt.
how do you work out the total variable costs ?
Total variable costs = variable cost for a single unit x number of units.
how do you work out total costs ?
Total costs = Fixed costs + Total variable costs
what is the definition of revenue ?
Revenue is the income a business earns from selling its goods or services
what is the definition of total revenue ?
Total Revenue is the income received from an organisations activities.
what is the formula for Total Revenue ?
Total Revenue = Price per unit x quantity of units sold.
what will the price a firm sets whether low or high determine on ?
It will determine the quantity that consumers want to buy and this will affect the amount of revenue.
