Cost, revenue and profit

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  • Created by: CrumbleT
  • Created on: 10-03-16 11:55
Define Fixed Costs/Direct costs
costs that do not change when outputs change
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Define Variable Costs
costs that change in direct proportion to changes in output
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Define Unit Cost
Cost of producing 1 item
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How do you work out total costs?
fixed costs + variable costs
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How do you work out the unit cost?
total costs / output
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Define Marginal Cost
the cost of producing one extra unit
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How do you work out sales revneue?
price x volume
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How do you work out total variable costs?
output x variable cost per unit
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Define social cost
the cost of a buisness on other stakeholders
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What is oppotunity cost?
When the next best alternative has to be given up in order to spend the money on the first choice
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Define Costing
the act of measuring the effects of business activity in financial terms. It can be used to work out if the activity is profitable enough to be worth pursuing
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What is standard costing?
The cost that the buisness would normally expect fro the production of a product. It is the target for the buisness and if the actual cost varies from the standard the business can investigate why.
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How do you work out profit?
sales revenue - total cost OR total contribution - fixed cost
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Define output
the amount of product produced over a certain period of time
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List 3 examples of fixed costs
-rent -salary -tax -insurance
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List 3 example of variable costs
-volume of raw matrerials -wages -packaging costs
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What is contribution?
(selling price - variable cost per item) it is calculates in order to establish the contribution of each unit of porduction towards the overheads. Once overheads have been covered profit is made
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Other cards in this set

Card 2

Front

Define Variable Costs

Back

costs that change in direct proportion to changes in output

Card 3

Front

Define Unit Cost

Back

Preview of the front of card 3

Card 4

Front

How do you work out total costs?

Back

Preview of the front of card 4

Card 5

Front

How do you work out the unit cost?

Back

Preview of the front of card 5
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