Money Flashcards
What are costs
Costs are the things business need to pay for such as Raw materials and bills
What is a fixed cost
Cost a business pays for
do not change with output
These costs stay the same no matter the how much the product or service the business makes or provided
Fixed cost examples
Salaries
Loan repayments
Insurance
Advertising
Utilities
Website Maintenance
What is a variable cost
A cost that changes with out put
The cost change depending on how many products or services a business provides
Example of variable costs
Stock
Packaging
How to calculate total cost
Fixed cost + total variable cost
What is revenue
Name given to the money a business makes for selling their product ( not profit)
How to calculate revenue
Selling price x number of sales
What is profit
Money left over after the business has sold products and paid of costs
How to calculate profit
Selling price per unit - total cost per unit
How to calculate total profit
Sales revenue - total cost
What is Break even
Where a business has not made a profit or a loss. Where the total revenue is = to the total costs
How to calculate break even
Fixed cost
———————————-
Selling price per unit - variable cost per unit
Break even graphs
Fixed cost - straight line as the cost do not change
Total cost - this line start where the fixed cost line does (can’t be lower than the fixed cost)
Sales revenue - this line starts at 0 because if you sell no products you make no revenue
