Costs,Revenue, Profit and Expenditure Flashcards
Start-up costs:
costs that need to be paid before the business starts trading, and whether money needs to be taken out of the business or persons savings.
Three examples of start-up costs:
- buying a property.
- buying a vehicle.
- buying shelving/other furniture.
Variable costs:
costs that change depending on the level of output.
- raw materials.
- hourly wages.
Running/Operational costs:
costs that are usually paid on a monthly basis to pay for the day to day running of the business.
- rent/facilities.
- utilities.
- salaries.
Fixed costs:
costs that stay the same regardless of the level of output.
- salaries.
- rent.
- insurance.
Direct costs:
costs that are directly related to the level output.
-maintenance costs of machinery.
Indirect costs:
costs that are incurred and NOT directly related to the level of output.
- accounting/legal expenses.
- office expenses.
- telephone expenses.
Net profit:
the amount of profit that the business has made after costs have been deducted.
Gross profit:
-difference between sales revenue and cost of goods sold
-costs which are directly related to sales revenue.
GROSS PROFIT= REVENUE- COST OF SALES.
Capital expenditure:
money spent by businesses or organisations on acquiring or maintaining fixed assets such as land, buildings and equipment.
Contribution:
imposed or required payment.
TOTAL CONTRIBUTION= TOTAL REVENUE - TOTAL VARIBALE COSTS.
in terms breakeven:
CONTRIBUTION=FIXED COSTS/ CONTRIBUTION PER UNIT.
per units:
CONTRIBUTION PER UNIT= SELLING PRICE PER UNIT-V VARIABLE COST PER UNIT.
Profit:
the amount of money left over after expenses have been deducted.
PROFIT= TOTAL REVENUE-TOTAL COSTS.
Semi-variable costs:
- a cost which is both fixed and variable.
- a cost which remains fixed up to a certain volume and then becomes a variable.
Revenue:
the amount of income a business has.
TOTAL REVENUE= UNIT PRICE X QUANTITY SOLD.
Gross profit margin calculation:
GROSS PROFIT MARGIN CALCULATION(%)= GROSS PROFIT(£)/SAES REVENUE(£).
