Costs and Revenue Flashcards
What are fixed costs?
Costs that DON’T change depending on output or production.
Name 3 examples of fixed costs.
Insurance, rent and business rates.
What are variable costs?
Costs that DO vary depending on output or production.
Name 3 examples of variable costs.
Raw materials, packaging, petrol for delivery.
What are start-up costs?
Costs that you need to pay when you first set up a business.
Name 3 examples of start-up costs.
Initial marketing, a sign for the shop and fixtures and fittings.
What are running costs?
Running costs are the costs in the day-to-day running of the business.
Name 3 running costs.
Rent, wages and heating and lighting.
How do you calculate total costs?
Fixed costs add variable costs
What’s another name for running costs?
Operating costs
How do you calculate variable costs?
Cost of one unit X number of units
What is revenue?
Revenue is money received by a business
Name 3 sources of revenue
Sales of the product, rent (if you have something you can rent out such as a van), interest (from money in the bank)
Name 2 sources of revenue for a charity shop
Donations from the public and collecting items to sell
How do you calculate revenue?
number of sales X price per unit
What is expenditure?
Money the business pays out.
What are overheads?
Overheads are another word for running costs
What are consumables?
These are products used by the business itself such as paper for till receipts
What are raw materials?
These are used to make a product for example cocoa beans and milk at Cadbury to make chocolate
Name 4 examples of expenditure
Wages, rent, business rates and raw materials
How do you calculate profit?
Revenue - expenditure
How can business increase profit?
Increase revenue or decrease expenditure
When does a business make a profit?
This happens when revenue is more than expenditure. It allows the business to grow and be better than competitors.
When does a business make a loss?
This happens when expenditure is more than revenue
