Revenue, Costs and Profit Flashcards
What is revenue?
The money a business makes from sales
How do you calculate revenue?
Selling price per unit x quantity of units sold
What does revenue affect? 2 points
Sales volume and price
What are fixed costs?
Costs that dont change with output
What are 2 examples of fixed costs?
Rent and basic salaries
What are variable costs?
Costs that change with output
What are 2 examples of variable costs?
Hourly wages, raw material costs
How do you calculate total variable costs?
Variable cost per unit x number of units sold
What is an example of semi-variable costs?
Telephone bills
How do you calculate total costs?
Fixed costs + Variable costs
What is profit?
The difference between revenue and costs
How do you calculate profit?
Total revenue - total costs
What 3 things can businesses do with profit?
Reinvest
Give to shareholders as dividends
Give to charity
How does large-scale production help costs keep low?
The fixed costs are shared out between more items
What do businesses use costs information to set?
Selling price of products and services
