COSTS’ REVENUES & PROFIT Flashcards
What are the costs
COSTS: The expenses that a business incurs in order to operate.
What are start up costs
Start up costs - are the one off (or infrequently occurring) expenditure items that are incurred at the set up stage of a business
What are running costs
Running costs - are the day to day costs incurred in order for the business to operate (wages, electricity, rent, subscriptions, marketing)
What are the 3 different types of costs
Fixed costs
Variable costs
Total costs
What are fixed costs
Costs to a business that stay the same regardless of output. E.g rent, salaries, interest payments
Don’t forget to say regardless of output - As its the key point
What are variable costs
Costs to a business that change in relation to output. E.g. Materials, wages, rates (businesses council tax) and distribution costs
What are total costs
All of the costs associated in providing goods and services
Formula = Fixed Costs + Total Variable Costs
What is revenue
All the money earnt in return for the sale of a business’s goods and services
Formula = Selling price x units sold
Revenue can also be known as: Sales revenue, Receipts, Turnover \
What is profit
The excess amount of money made by a company when its total revenue exceeds its total costs.
Formula = Total revenue (TR) - Total costs (TC)
What is loss
The negative difference between total costs, and total revenue when costs outweigh revenue
