5.3 Revenue, costs, profit and loss

• What is the definition of revenue?

  Total income before expenses
• What is the revenue if a business sells 200 mugs at £10 each?

  £2000
• The formula for calculating revenue is Price multiplied by Quantity.
• What are the two main types of costs in business?

  Fixed and variable costs
• Give an example of a fixed cost.

  Rent
• What is the rent cost for a bakery if it pays £2,000 monthly, regardless of cake production?

  £2,000
• A loss occurs when total costs exceed total revenue.
• What is the total revenue if a company sells 1,000 t-shirts at £15 each?

  £15,000
• What are the total costs if fixed costs are £10,000 and variable costs are £25 per unit, with 500 units produced?

  £22,500
• Variable costs change in direct proportion to the level of production.


  True
• Gross profit is calculated as revenue minus the cost of goods
• Order the types of profit from highest to lowest deduction:

  1️⃣ Gross Profit

  2️⃣ Operating Profit

  3️⃣ Net Profit
• Profit is calculated as total revenue minus total costs.


  True
• What is the formula for calculating total costs when fixed costs are £10,000, variable costs are £20 per unit, and 500 units are produced?

  $£10,000 +$$(£20 \times 500)$
• Match the type of profit with its calculation:

  Gross Profit ↔️ Revenue - Cost of Goods Sold

  Operating Profit ↔️ Gross Profit - Operating Expenses

  Net Profit ↔️ Operating Profit - Interest & Taxes
• What is the formula for calculating operating profit?

  $Gross Profit - Operating Expenses$
• What is the formula for calculating a loss?

  Loss = Total Costs - Total Revenue</latex>
• Fixed costs remain constant regardless of production levels.

  True
• A Profit & Loss Statement summarizes a business's revenue, costs, and net profit or loss
• Price refers to the amount each item is sold for.

  True
• Fixed costs remain constant regardless of the level of production.
• Give an example of a variable cost.

  Raw materials
• Fixed costs remain constant regardless of the level of production.
• Profit is calculated as Total Revenue minus Total Costs.


  True
• Operating profit is calculated by subtracting operating expenses from gross profit.


  True
• Total costs include both fixed and variable costs.


  True
• What is revenue calculated by multiplying?

  Price per unit by quantity sold
• Match the cost type with its description:

  Fixed Costs ↔️ Expenses that do not change with production levels

  Variable Costs ↔️ Expenses that change with production levels
• A loss occurs when total costs exceed total revenue.


  True
• What two elements are needed to calculate total revenue?

  Price and quantity
• Fixed costs are expenses that do not change with production levels
• Profit is calculated by subtracting total costs from total revenue
• Order the three types of profit from highest to lowest in terms of deduction of expenses:

  1️⃣ Gross Profit

  2️⃣ Operating Profit

  3️⃣ Net Profit
• Net profit is calculated by subtracting interest and taxes from operating profit.


  True
• A Profit & Loss Statement summarizes revenue, costs, and net profit or loss over a specific period.


  True
• What is an example of a variable cost?

  Raw Materials
• Revenue is calculated by multiplying the price per unit by the quantity sold.


  True
• Variable costs change in direct proportion to the level of production.

  True
• What are fixed costs influenced by?

  Production level
• What is the impact of variable costs on production?

  Increase or decrease