Measuring profit Flashcards
1
Q
how to workout profit
- how can you increase profit?
A
total revenue - total costs
total revenue = how much your selling it for x how much you sold
total cost = total variable cost + total fixed costs
- you can increase profit by increasing price or increasing how much you sell.
2
Q
what is variable cost?
how to workout total variable costs?
what are e.g of variable costs?
A
cost that change directly in proportion to output
variable cost per unit x how much you sold
- raw materials
- packaging
- hourly wages
3
Q
What are fixed costs?
A
- cost that remain consistent in short run regardless of output
examples
- loan repayments
- rents
- heat/lightning
