Profit, revenue, etc terms Flashcards
1
Q
Profit
A
-the difference between a firm’s revenues from its total costs .
-a reward for risk and return on capital invested
2
Q
Profit formula
A
Profit = revenue - total costs
3
Q
Revenue
A
The income generated by sales of a product
4
Q
Revenue Formula
A
Revenue = selling price x quantity sold
5
Q
The transformation process
A
What happens inside the business. This is where value is added to inputs to create outputs
6
Q
Added value formula
A
Added value = selling price - cost of brought in materials, components, services
7
Q
Fixed costs
A
costs that do not change directly with the level of the output
8
Q
Variable costs
A
-Costs that change directly with output
-They will increase by a set amount each time a new unit is made
9
Q
Total costs formula
A
Total costs = fixed costs + variable costs
