Total revenue
Total revenue = Price x Quantity
or
TR = P X Q
or
TR = P X Q
fixed costs
costs which do not change with the output produced or the services provided. Such as:
•Rent
•Business rates
•Advertising costs
•Administration costs
•Salaries
•Insurance
Fixed costs will remain the same and have to be paid regardless of whether the business is busy or not
•Rent
•Business rates
•Advertising costs
•Administration costs
•Salaries
•Insurance
Fixed costs will remain the same and have to be paid regardless of whether the business is busy or not
variable costs
are costs which change directly with the level of production or service provided such as:
• Cost of buying raw materials
• Fuel costs
• Utilities such as gas, electricity and water
• Wages for casual staff
• Telephone bills
• Stock
With variable costs, the more that is produced or provided, the higher the variable costs will be. Also, if a business does nothing, the variable costs will be zero.
• Cost of buying raw materials
• Fuel costs
• Utilities such as gas, electricity and water
• Wages for casual staff
• Telephone bills
• Stock
With variable costs, the more that is produced or provided, the higher the variable costs will be. Also, if a business does nothing, the variable costs will be zero.
total costs
Total costs = Fixed costs + Variable costs
or
TC = FC + VC
or
TC = FC + VC
profit or loss
Profit/loss = Total revenue – Total Costs