expenses that business organisations incur when producing and selling their different products
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fixed costs
remain unchanged when the output of a business organisation changes . for example rent ,lone repayments and insurances
2 of 18
steeped costs
t is likely that fixed costs will increase when a business organisation is working at full capacity for example premises rent and insurance
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veriable costs
variable costs are costs that very directly with the level of output for example stock , raw materials ,components and packaging costs
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total costs
total costs are calculated by adding together all of the organisations costs or any particular level of output for example fixed costs + variable costs .
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the formula to work out total costs
fixed costs + variable costs
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contribution
per unit is calculated as selling price per unite less variable costs per unit
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bake eve point in units
fixed costs dived by selling price per unite -variable costs per unit
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brake even point in unites
fixed costs divided by contribution per unit
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total revanue
output in units x selling price per unit
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total veriable costs
output in unites x variable costs per units
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when drawing a brake even graph , three lines need to be plotted and drawn
fixed costs total costs total revenue
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using brake even information
is used by a business to determine how many unites it needs to sell in order to cover its costs and not make a loss
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acconts
may use this information to see how different sales levels will affect an organisations profits by determining how much should be sold
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profit or loss
selling price per unite - total costs per unit
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how profit is calculted for a given leval of output
sales revanue - total costs
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cash flow
is the movement of cash in and out of the bussiness
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net cash flow
cash in flow - cash out flow
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Other cards in this set
Card 2
Front
fixed costs
Back
remain unchanged when the output of a business organisation changes . for example rent ,lone repayments and insurances
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