Business revenue and costs Flashcards
What is sales revenue or turnover
The total amount of money a business receives from sales.
what is the formula for sales revenue
Total revenue = quantity sold × selling price
What are variable costs?
Costs that vary in direct proportion to output changes, such as raw materials and labour.
What are fixed costs?
Costs that do not vary with output, such as rent, management salaries, and depreciation.
What are semi-variable costs?
Costs that include both fixed and variable components, like telephone charges with a fixed rate plus an extra rate for call usage.
what is the formula for total costs
Total Costs = Fixed Costs + Variable Costs
What is profit?
The difference between total revenue and total costs.
what are direct costs
Costs that arise directly from production, such as rent, materials, direct labour, and licence fees.
what is the formula for profit
Profit = Total Revenue − Total Costs
What are overheads or indirect costs?
Costs not directly related to production, such as employee salaries and advertising.
What is contribution?
The difference between sales revenue and variable costs, used to cover fixed costs and generate profit once fixed costs are covered.
what is the formula for contribution
Contribution per unit = Selling Price per unit − Variable Costs per unit
