Cost Revenue And Profit Flashcards
1
Q
What is revenue
A
Money received from all goods and services
2
Q
What is cost
A
Money that the businesses pay out
3
Q
What is profit
A
Surplus of revenue after costs has been paid ( revenue-costs)
4
Q
Equation for revenue
A
Revenue = selling price x quantity sold
5
Q
What is a fixed cost
A
Cost doesn’t change as a business changes its level of output e.g rent and salary
6
Q
What is variable cost
A
Changes directly with the level of business output e.g raw materials and packaging
7
Q
Equation for total cost
A
Fixed cost + variable cost
8
Q
How to improve profit
A
- increase revenue
- decrease costs
9
Q
How to increase profits
A
- raise price
- increase demand- advertise, sponsorship,promotions,branding
10
Q
How to decrease costs
A
- cheaper raw materials
- cut wages
- cheaper rent
11
Q
Why is profit important
A
- incentive & reward for business
- measures success
- guide for future investment
- source of finance
- attract future funding and investment
