Financial Terms Flashcards
1
Q
Fixed costs (FC)
A
Fixed costs are costs that do not vary with the level of business.
These are costs that you need to pay regardless of how many goods or services you produce.
For example: rent (doesn’t change depending on the level of business)
2
Q
Variable costs (VC)
A
Variable costs are costs that do vary with the level of trade. These are direct costs associated with the production of goods / services
3
Q
Total costs
A
Total costs are calculated by adding all your fixed and variable costs together
4
Q
Sales revenue
A
Money into your business through sales is called sales revenue.
Formula: SR (Sales Revenue) = Price of the goods x Quantity that have been sold
5
Q
Gross profit
A
Sales revenue minus variable costs
6
Q
Net profit
A
Sales revenue minus fixed costs and variable costs
