Revenue, Costs and Profit

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  • Revenue, Costs and Profit
    • •Fixed costs – have to be paid even if no products are sold (e.g. rent of ice cream shop)
    • •Variable costs – increase by a step every time an extra product is sold.  
    • Variable cost = variable cost per unit  x  quantity produced Total costs = Variable costs + fixed costs
    • •Revenue = money coming into a business
    • Total revenue = sell price  x  qty sold
    • Gross profit considers revenue and cost of production 
    • Net profit considers gross profit and operating costs
    • Gross profit = revenue - cost of sales
    • Net profit = gross profit - running costs
    • Break even =   Fixed costs    Sell price – cost per unit

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