Business Learning Outcome 2 0.0 / 5 ? BusinessCosts,Profit,Revenue,Break-EvenBTEC NationalOCR Created by: RHunwickeCreated on: 09-01-22 16:54 What are Costs? Costs are the things businesses have to pay for in order to produce a product or service. 1 of 17 What are Fixed Costs? Fixed costs are things a business pays for that do not change depending on the amount of a product a business makes. 2 of 17 Examples of Fixed Costs -Rent -Insurance -Staff wages -Advertising -Loan repayments -Utilities 3 of 17 What are Variable Costs? Variable costs are the costs a business pays that depends on how many products a business produces. 4 of 17 Examples of Variable Costs -Raw material -Stock -Packaging 5 of 17 How are Total Costs Calculated? Total Costs=Fixed Costs+(Variable Cost per unit x Units Produced) 6 of 17 What is Revenue? Revenue is the money generated from selling products or services. 7 of 17 How is Total Revenue Calculated? Revenue=Selling Price x Number of Sales 8 of 17 What is Profit? Profit is the money left over from revenue once costs have been paid. 9 of 17 How is Total Profit Calculated? Total Costs=Total Revenue-Total Costs 10 of 17 What is Profit per Unit? Profit per Unit is the amount of profit a business makes on just one item sold 11 of 17 How is Profit per Unit Calculated? Profit per Unit=Selling Price per Unit-Total Costs per Unit 12 of 17 What is Break-Even? Break-Even is the point at which a business does not make a profit or a loss-its revenue from sales and its total costs are equal. 13 of 17 How is Break-Even Calculated? Break-Even=Fixed Costs/(Selling Price per Unit-Variable Costs per Unit) 14 of 17 Why is Break-Even Useful for a Business? They know what sales they need in order to be profitable; so, they know how many products to produce. 15 of 17 What does Increasing Selling Prices do to the Break-Even Point? Increasing selling prices will lower a business' Break-Even point. 16 of 17 What Impact does Increased Costs have on the Break-Even Point? Increase in either fixed costs and/or variable costs will result in a higher Break-Even point. 17 of 17
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