Front

Costs

Back

are expenses that a business has to pay to engage in its trading activities.

Front

Revenue

Back

is the income a business receives from selling its goods or services.

Front

Direct costs

Back

can be related to the production of a

particular product and vary directly with the level of output.

Front

Indirect costs

Back

are overheads that cannot be allocated to

the production of a particular product and relate to the business as a whole.

Front

Full costing

Back

allocates all the costs of production for the

whole business. Therefore, these costs are absorbed into each output unit.

This is also known as absorption costing.

Front

Contribution

Back

can be defined as the difference between

sales revenue and variable costs of production.

Front

Break-even

Back

is the level of production or output at which a

business’ sales or total revenue is exactly equal to its total costs of production.

Front

Profits

Back

are the amount by which revenue exceeds total costs.

Front

Contribution costing

Back

calculates the cost of a product

solely on the basis of variable costs, thus avoiding the need to allocate fixed costs.

Front

Average costs

Back

are the total cost of production divided by

the number of units produced.