Chapter 19- revenue and costs

Question 1

Sales volume

Answer 1

The total quantity of products solid

Question 2

Sales revenue

Answer 2

The total of incoming. Payments for products sold

Price x quantity sold

Question 3

Start up costs

Answer 3

Are incurred setting up a business

Question 4

Capital spending

Answer 4

Occurs when a business invests in premises or equipment or something of long term benefit to the business

Question 5

Investment

Answer 5

Involves spending now which generates income in the future

Question 6

Running costs

Answer 6

Paid regularly by a business in the course of operating. They included fixed and variable costs and correspond to total costs

Question 7

Fixed costs

Answer 7

Are not directly linked to the level of output of the business. They don’t change when output increases or decreases

Question 8

Variable costs

Answer 8

Are directly linked to the level of output of the business. They change as output increases or decreases

Question 9

Depreciation

Answer 9

Is the loss in value of capital equipment over time, often due to wear and tear or technology becoming dated

Question 10

Law of diminishing returns

Answer 10

If one or more of our factors of production is fixed adding more and more of a variable factor will eventually add less to output

Question 11

Average variable costs

Answer 11

Are the total of variable costs divided by output