Topic Area 3 Flashcards
What are Fixed Cost?
Are costs that are not directly related to the amount produced
What are examples of Fixed Costs?
- Property Costs
- Utilites
- Insurance
- Salaries
How do you calculate the Fixed Costs?
Sum of all the fixed costs
How do you calculate the total fixed cost per unit?
Total fixed cost ÷ number of units produced
How do you calculate the total Variable costs?
Variable Costs Per Unit x Quantity
How do you calculate the Variable Cost Per Unit?
Total Variable Cots ÷ Number of Units Produced
What is Revenue?
Is Money that a business receives
Where will Revenue come from?
Customers buying goods/or services
What is Costs?
Things that a business has to pay for; it is money being spent by a business
How can Total Revenue be calculated?
Selling Price Per Unit x Number of units sold
What is Profit?
The difference between the amount earned and the amount spent in buying, operating, or producing something
How do you calculate the Profit?
Total Revenue - Total Costs
What does it mean if Profit is being made?
Products are being sold for more than they costs
What does it mean if loss is being made?
Products are being sold for less than they costs
How do you calculate the profit per unit?
Revenue Per Unit - Total Costs Per Unit
What is Break-even?
Reaching a point in a business venture when the profits are equal to the costs
How do you calculate the Break Even Point?
Fixed Costs
÷
Sale price per unit - variable cost per unit
