Importance of cost, revenue and profit Flashcards
1
Q
What are the 5 main business objectives?
A
- Profit maximisation
- Survival
- Sales maximisation
- Customer satisfaction
- Ethical considerations
2
Q
What are the different types of costs?
A
Total cost= variable costs + fixed costs
Fixed costs do not change
Variable cost changes with the level of output- unit cost x quantity sold
Average cost= total cost/ number of sales
3
Q
What are the different types of revenue?
A
Total revenue= price x quantity sold
Average revenue= total revenue / output =Price
4
Q
What is profit?
A
The amount of money that the owners receive- Profit= revenue - total costs
5
Q
A
