Costs

Question 1

What are variable costs? (Exam answer)

Answer 1

They are costs that change directly in proportion to output.

Question 2

What are variable costs (Easy to understand form)

Answer 2

They are costs that change in correlation with the amount of units a business sells/ makes.

Question 3

What is the measurement for total variable costs?

Answer 3

Variable costs per unit X Quantity

Question 4

What are examples of variable costs?

Answer 4

• Raw Materials
• Packaging
• Wages Of Staff (over time payment)
• Electricity

Question 5

What are fixed costs? (exam style answer)

Answer 5

Costs that remain constant in the short run, regardless of output.

Question 6

What are fixed costs (Easy to understand style?)

Answer 6

Costs that don’t change is proportion to how many sales you make - they always stay the same

Question 7

What are examples of fixed costs?

Answer 7

Loan repayments
Rent / rates
Salaries
Admin costs
Vehicles
Marketing
Heating/ lighting

Question 8

What is the definition of total costs? (Exam style answer)

Answer 8

all the costs of production incurred by a business.

Question 9

What is the definition of total costs (Easy to understand)

Answer 9

All of the costs added together: total fixed costs + total variable costs

Question 10

What is the measurement of total costs?

Answer 10

total fixed costs + total variable costs

Question 11

What is profit?

Answer 11

Total revenue - total costs