Section 3 - 3.2 costs and revenues

Question 1

Cost

Answer 1

Refers to the sum of money incurred by a business in the production process e.g. the cost of raw materials, wages and salaries, insurance, advertising and rent

Question 2

Direct costs

Answer 2

Are costs specifically attributed to the production or sale of a particular good or service. Direct costs can be traced back to the product and/or to a cost centre

Question 3

Fixed costs

Answer 3

Are the costs that do not vary with the level of output. They exist even if there’s no output, e.g. The cost of rent, management salaries, and interest repayments on bank loans

Question 4

Indirect costs

Answer 4

Our costs that do not directly link to the production or sale of a specific product, e.g. rent, wages of staff and lighting

Question 5

Price

Answer 5

Refers to the amount of money a product is sold for i.e. the sum paid by the customer

Question 6

Revenue

Answer 6

Is the money that a business collects from the sale of its goods and services. It is calculated by multiplying the unit price of each product by the quantity sold

Question 7

Revenue stream

Answer 7

Refers to the money coming into a business from its various business activities e.g. sponsorship deals, merchandise, membership fees and royalties

Question 8

Semi variable costs

Answer 8

Our cost that have an element of both fix costs and variable costs EG power and electricity or salary staff who also earned commission

Question 9

Total costs

Answer 9

Are the sum of all variable costs and all fixed costs of production

Question 10

Variable costs

Answer 10

Our costs of production that change in proportion to the level of output e.g. raw materials and peace right earnings of production workers