5.3 Revenue, costs, profit and loss

• Arrange the steps to calculate revenue in the correct order.

  1️⃣ Determine the number of units sold

  2️⃣ Identify the price per unit

  3️⃣ Multiply the number of units sold by the price per unit
• If a business has monthly fixed costs of £1,000 and variable costs of £2 per unit, its total costs for producing 500 units would be £2,000
• A loss occurs when a business's total costs exceed its revenue
• Total costs are calculated by adding fixed costs and variable costs.


  True
• Total costs are calculated by adding fixed and variable costs.


  True
• What are examples of variable costs?

  Raw materials, labor
• A loss occurs when total costs are greater than revenue.


  True
• What is revenue in a business?

  Total income from sales
• Which expenses are considered variable costs?

  Raw materials, labor
• What is the formula for loss?

  Total Costs - Revenue
• What happens to profit if costs decrease while revenue stays constant?

  Profit increases
• Revenue is the total income from sales after deducting costs.


  False
• If a company sells 100 widgets at £5 each, the revenue is £500.


  True
• Match the cost type with its definition and an example.

  Fixed Costs ↔️ Expenses that do not change with production levels ||| Rent, salaries, insurance

  Variable Costs ↔️ Expenses that vary directly with production ||| Raw materials, labor costs

  Total Costs ↔️ Sum of fixed and variable costs ||| Total cost = Fixed costs + Variable costs
• What is profit in business terms?

  Revenue minus total costs
• Variable Costs are expenses that vary directly with the quantity of goods or services produced
• What are variable costs in a business?

  Expenses that vary with production
• What are examples of fixed costs?

  Rent, salaries, insurance
• What is the formula for profit?

  Revenue - Total Costs
• A loss results in a negative financial outcome.
• Which expenses are considered fixed costs?

  Rent, salaries, insurance
• What is the formula for profit?

  Revenue - Total Costs
• What happens to profit if revenue increases while costs stay constant?

  Profit increases
• Revenue is the total income a business generates from selling its goods or services before any costs are deducted
• Revenue is calculated using the formula: Revenue = Number of Units Sold × Price per Unit
• What is the revenue if 200 teddy bears are sold at £15 each?

  £3,000
• Total costs are calculated by subtracting fixed costs from variable costs.

  False
• What is the formula to calculate revenue?

  Revenue = Units × Price
• What are fixed costs in a business?

  Expenses that do not change
• Total costs are calculated by adding a business's fixed costs and variable costs.
• Profit occurs when revenue exceeds total costs.


  True
• Profit is the income remaining after all expenses are paid.
• Revenue is calculated by multiplying the number of units sold by the price per unit.
• Total costs are the sum of fixed and variable costs.


  True
• Changes in revenue and costs directly impact a company's profit.
• If both revenue and costs increase, profit always increases.

  False