COSTS AND REVENUES

Question 1

Fixed Costs

Answer 1

Definition: Costs that remain constant regardless of the level of production or sales. They do not change with increased or decreased output.

Examples:
- Rent for a company’s office or factory space.
- Insurance premiums for business coverage.
- Salaries of permanent staff members.

Question 2

Variable Costs

Answer 2

Definition: Costs that change in direct proportion to the level of production or sales.

Examples:
- Cost of raw materials: More products, more materials needed.
- Hourly wages for temporary staff: Pay increases when more labor is required.
- Packaging costs: Expenses vary with the quantity produced.

Question 3

Direct Costs

Answer 3

Definition: Costs directly attributed to a specific product, project, or department.

Examples:
Cost of labor for manufacturing a specific product.
Materials used in a particular project.
Advertising expenses for a single product campaign.

Question 4

Indirect Costs

Answer 4

Definition: Costs not directly tied to a specific product, project, or department and are incurred to support overall operations.

Examples:
Rent for the entire facility.
Office supplies used across various departments.
Utility bills for the entire building.

Question 5

Total Revenue

Answer 5

Definition: Total revenue (also known as turniver) is the overall income generated by a business from the sale of its products or services over a specific period.

Formula for Total Revenue:
Total Revenue = Price per Unit x Quantity Sold

Question 6

Other revenue streams:

Answer 6

• Rental income
• Sale of fixed assets
• Dividends
• Intrest on deposits
• Donations