Costs, Revenue and profit Flashcards
What are costs?
Expenses the business has to pay out.
What is revenue?
Sales that the business has coming in.
What are fixed costs?
Costs that do not change per output.
What’s an example of a fixed cost?
Rent, salaries, insurance
What are variable costs?
Costs that change per output.
What’s an example of a variable cost?
Wages, stock, packaging, electricity
What’s the formula for total cost?
Total Cost = Fixed Cost + Variable Cost
Give the formula for Total Variable Cost
Total Variable Cost = Quantity x Variable Cost Per Unit
eg. 1000 x £2 = £2000 variable cost
What does TVC stand for?
Total Variable Cost
Give the formula for Sales Revenue
Sales Revenue = Quantity x Selling Price
eg. 1000 x £2 = £2000 Sales Revenue
How do you find Profit?
Profit = Sales Revenue - Total Cost
What is Profit also known as?
Surplus
What is Profit?
The money a business is left with after paying all its costs.
What is deficit?
A loss that a business makes.
What is Gross Profit?
The left overs after all cost have been deducted.
What is Net Profit?
The money left over after all the expenses are paid.
Find the difference between Net profit and Gross Profit.
Net Profit is the money left after all expenses have been paid.
Gross Profit is the money left after distributing and producing its products.
What is the formula for Gross Profit?
Gross Profit = Sales Revenue - Costs of Goods
What is the formula for Net Profit?
Net Profit = Gross Profit - Expenses
What does a business aim to do?
Make Profit.
