Costs, Revenue and profit

Question 1

What are costs?

Answer 1

Expenses the business has to pay out.

Question 2

What is revenue?

Answer 2

Sales that the business has coming in.

Question 3

What are fixed costs?

Answer 3

Costs that do not change per output.

Question 4

What’s an example of a fixed cost?

Answer 4

Rent, salaries, insurance

Question 5

What are variable costs?

Answer 5

Costs that change per output.

Question 6

What’s an example of a variable cost?

Answer 6

Wages, stock, packaging, electricity

Question 7

What’s the formula for total cost?

Answer 7

Total Cost = Fixed Cost + Variable Cost

Question 8

Give the formula for Total Variable Cost

Answer 8

Total Variable Cost = Quantity x Variable Cost Per Unit

eg. 1000 x £2 = £2000 variable cost

Question 9

What does TVC stand for?

Answer 9

Total Variable Cost

Question 10

Give the formula for Sales Revenue

Answer 10

Sales Revenue = Quantity x Selling Price

eg. 1000 x £2 = £2000 Sales Revenue

Question 11

How do you find Profit?

Answer 11

Profit = Sales Revenue - Total Cost

Question 12

What is Profit also known as?

Answer 12

Surplus

Question 13

What is Profit?

Answer 13

The money a business is left with after paying all its costs.

Question 14

What is deficit?

Answer 14

A loss that a business makes.

Question 15

What is Gross Profit?

Answer 15

The left overs after all cost have been deducted.

Question 16

What is Net Profit?

Answer 16

The money left over after all the expenses are paid.

Question 17

Find the difference between Net profit and Gross Profit.

Answer 17

Net Profit is the money left after all expenses have been paid.
Gross Profit is the money left after distributing and producing its products.

Question 18

What is the formula for Gross Profit?

Answer 18

Gross Profit = Sales Revenue - Costs of Goods

Question 19

What is the formula for Net Profit?

Answer 19

Net Profit = Gross Profit - Expenses

Question 20

What does a business aim to do?

Answer 20

Make Profit.