Revenue, Costs and Profit

Question 1

What is revenue?

Answer 1

The money a business makes from sales

Question 2

How do you calculate revenue?

Answer 2

Selling price per unit x quantity of units sold

Question 3

What does revenue affect? 2 points

Answer 3

Sales volume and price

Question 4

What are fixed costs?

Answer 4

Costs that dont change with output

Question 5

What are 2 examples of fixed costs?

Answer 5

Rent and basic salaries

Question 6

What are variable costs?

Answer 6

Costs that change with output

Question 7

What are 2 examples of variable costs?

Answer 7

Hourly wages, raw material costs

Question 8

How do you calculate total variable costs?

Answer 8

Variable cost per unit x number of units sold

Question 9

What is an example of semi-variable costs?

Answer 9

Telephone bills

Question 10

How do you calculate total costs?

Answer 10

Fixed costs + Variable costs

Question 11

What is profit?

Answer 11

The difference between revenue and costs

Question 12

How do you calculate profit?

Answer 12

Total revenue - total costs

Question 13

What 3 things can businesses do with profit?

Answer 13

Reinvest
Give to shareholders as dividends
Give to charity

Question 14

How does large-scale production help costs keep low?

Answer 14

The fixed costs are shared out between more items

Question 15

What do businesses use costs information to set?

Answer 15

Selling price of products and services

Question 16

What does it mean if a business is a ‘price taker’ in a very competitive market?

Answer 16

Doesnt have control over selling price

Question 17

Why do businesses set budgets?

Answer 17

To forecast how much costs are going to be over a year.

Question 18

What are 3 reasons why profit is important?

Answer 18

Motivate people
Good source of finance
Used to attract investors