Costs Flashcards
What are start-up costs?
Start-up costs are the money an enterprise spends on setting up, before it starts trading
What are running costs?
Running costs are the day-to-day costs once an enterprise is trading
Start-up costs will be influenced by the type of enterprise.
For example:
1) A clothing manufacturer …
For example:
1) A clothing manufacturer will require industrial premises, machinery and materials to produce goods
Start-up costs will be influenced by the type of enterprise.
For example:
1) A clothing manufacturer will require industrial premises, machinery and materials to produce goods
2) A high street retailer …
For example:
1) A clothing manufacturer will require industrial premises, machinery and materials to produce goods
2) A high street retailer will require shop premises, shop fittings and items to sell
Start-up costs will be influenced by the type of enterprise.
For example:
1) A clothing manufacturer will require industrial premises, machinery and materials to produce goods
2) A high street retailer will require shop premises, shop fittings and items to sell
3) A service enterprise such as …
For example:
1) A clothing manufacturer will require industrial premises, machinery and materials to produce goods
2) A high street retailer will require shop premises, shop fittings and items to sell
3) A service enterprise such as a car mechanic will require a garage premises, parts and tools
Who pays start-up costs?
Before it earns any income, the enterprise has to …
Before it earns any income, the enterprise has to find the finance to pay its start-up costs
Who pays start-up costs?
Before it earns any income, the enterprise has to find the finance to pay its start-up costs.
What may sources include?
Sources may include:
1) The owner’s own money
2) Money loaned or given by family and friends
3) A business loan
4) An investor
How many main types of running costs are there?
There are two main types of running costs:
1) Fixed costs
2) Variable costs
There are two main types of running costs, fixed costs and variable costs.
What are fixed costs?
Fixed costs are costs that the enterprise has to pay no matter how well it is doing
There are two main types of running costs, fixed costs and variable costs.
Fixed costs are costs that the enterprise has to pay no matter how well it is doing.
What are some common fixed costs?
Some common fixed costs are:
1) Rent
2) Business rates
3) Heating and lighting charges
4) Insurance
There are two main types of running costs, fixed costs and variable costs.
What are variable costs?
Variable costs are costs directly related to the number of items produced or sold
There are two main types of running costs, fixed costs and variable costs.
Variable costs are costs directly related to the number of items produced or sold.
For example:
1) The more orders …
For example:
1) The more orders a clothing manufacturer receives for t-shirts, the more material it will need to produce them
There are two main types of running costs, fixed costs and variable costs.
Variable costs are costs directly related to the number of items produced or sold.
For example:
1) The more orders a clothing manufacturer receives for t-shirts, the more material it will need to produce them
2) The more vehicles …
For example:
1) The more orders a clothing manufacturer receives for t-shirts, the more material it will need to produce them
2) The more vehicles a car mechanic repairs and services, the more replacement parts will be required
Together, fixed costs and variable costs make up what?
Together, fixed costs and variable costs make up the total running costs of the enterprise
Together, fixed costs and variable costs make up the total running costs of the enterprise.
Total costs = ?
Total costs = Fixed costs + Variable costs
