Costs, Profit, Revenue and Expenditure Flashcards
What are start up costs?
- Costs that need to be paid before the business starts trading, and out of a business/person’s savings.
Give at least three examples of start up costs.
- Purchasing a property
- Purchasing a vehicle
- Purchasing shelving/other furniture.
What are variable costs?
- Costs which change depending on the level of output
What are running/operational costs?
Costs that are usually paid on a monthly basis to pay for the day to day running of the business.
What are fixed costs?
- Costs that stay the same regardless of the level of output.
What are direct costs?
- Costs that are directly related to the level of output.
What are indirect costs?
- Costs that are incurred and NOT directly related to the level of output.
What is profit?
- The amount of money left over after expenses have been deducted.
What is operating profit?
The difference between sales revenue, costs of sales and other operating costs.
What is the formula for profit?
Profit = revenue - expenditure
How should business start up be financed?
- Through savings or money from friends and family.
What is the formula for total costs?
TOTAL COSTS = FIXED COSTS + VARIABLE COSTS
What are semi-variable costs?
- A cost which is both fixed and variable.
- A cost which remains fixed up to a certain volume and then becomes variable.
How is total revenue calculated?
REVENUE = UNIT PRICE X QUANTITY SOLD
What is revenue?
- The amount of income a business has.
