Costs, Revenue And Profit Flashcards
What are fixed costs?
Costs that don’t change regardless of level of output
What are variable costs?
Costs that change with the level of output
What are examples of fixed costs?
Rent, mortgage, salaries, advertising
What are examples of variable costs?
Raw materials
What are overheads/ indirect costs?
Costs that cannot be attributed to a particular unit of output
what are direct costs? C
Costs that are directly attributable to a unit output
What does a fixed cost graph look like?
Cost up y axis
Output on x axis
Straight horizontal line for fc
What does a variable costs graph look like?
Costs up y axis
Output at x axis
Straight diagonal line going up to sun
What do fixed + variable costs equal?
Total costs
What are unit costs?
The cost of producing 1 product - total cost/ output
Whats a marginal cost?
The cost of producing an extra unit
Whats an opportunity cost?
Potential gain lost by choosing to take different course of action
What is revenue?
The cash that flows into a business from sale of goods
How do you calculate revenue?
Price x number sold
What is profit?
Total revenue - total costs
