1.3- Revenue, costs and profit

What is Revenue

• Income from selling products or services

• The money being paid out for bills

• The money kept by an entrepreneur after costs are paid

• The selling price of each of the items

What is a fixed cost

• Costs that changes with output

• Costs that remains the same regardless of output

• Costs that change every 6 months

• Costs that an entrepreneur fixes in for 12 months

Which two of the following are fixed costs

• Rent

• Raw materials

• Electricity

• Water

• Advertising

A variable cost changes with output (the more you make the more it costs)

• True

• False

Which two of the following are variable costs

• Raw materials

• Rent

• Insurance

• Water

• Advertising

Calculate the revenue if a business sells 20,000 units at £2 each

• £4000

• £40,000

• $40,000

• £400,000

Calculate the revenue if a business sells 80,000 units at $2.50 each

• $200,000

• £200,000

• £20,000

• $20,000

Business A has £5000 fixed costs per month. The variable costs per item they make and sell is £3. What is the businesses total costs if they make and sell 10,000 units.

• £5003

• £30,000

• £35,000

• £25,000

Business B has £1000 fixed costs per month. The variable costs per item they make and sell is £0.50. What is the businesses total costs if they make and sell 6000 units.

• £4000

• £3000

• £1000.50

• £2000

Which formula calculates profit.

• Revenue - fixed costs = profit

• Revenue - variable costs = profit

• Revenue - total costs = profit

• Revenue - profit = variable costs