5.3 Revenue, Costs, Profit, and Loss

    Cards (67)

    • What is revenue in business terms?
      Total income from sales
    • Profit is defined as earnings after expenses are deducted.

      True
    • Steps to apply revenue, costs, profit, and loss concepts to a case study
      1️⃣ Define business operations
      2️⃣ Identify fixed and variable costs
      3️⃣ Calculate total costs
      4️⃣ Determine revenue
      5️⃣ Calculate profit or loss
    • Revenue is the total income from sales
    • Variable costs change directly with the level of output
    • Fixed costs do not change with the level of output or sales
    • Variable costs change directly with the level of output or sales
    • To calculate total costs, add fixed costs and variable costs
    • Profit is calculated by subtracting total costs from total revenue.
      True
    • Businesses need to understand three main types of costs: fixed, variable, and total
    • A business incurs a loss when its costs exceed its revenue
    • Revenue is a key metric for measuring financial performance and growth.

      True
    • What is profit defined as in business terms?
      Earnings after expenses
    • What remains constant regardless of output level in a business?
      Fixed costs
    • Fixed costs remain the same regardless of how much a business produces.

      True
    • Total costs are the sum of fixed and variable costs
    • If fixed costs are £10,000 and variable costs are £5,000, the total costs are £15,000.
      True
    • Revenue represents the total amount of money a business receives from selling goods or services
    • Order the three main types of business costs from most to least influenced by output:
      1️⃣ Variable Costs
      2️⃣ Total Costs
      3️⃣ Fixed Costs
    • The formula to calculate total costs is Fixed Costs + Variable Costs.

      True
    • What type of costs increase as production rises?
      Variable Costs
    • What formula is used to calculate profit?
      Profit = Revenue - Total Costs
    • How is profit calculated if revenue is £50,000, fixed costs are £20,000, and variable costs are £15,000?
      Profit = 50,000 - 35,000
    • What is the formula for calculating a loss?
      Loss = Total Costs - Total Revenue
    • What is revenue defined as?
      Total income from sales
    • What is the formula for calculating total costs?
      Total Costs = Fixed Costs + Variable Costs
    • The formula for total costs is: Total Costs = Fixed Costs + Variable Costs
    • Revenue is the total money received from sales
    • Total costs include both fixed and variable costs
    • The break-even point is the level of sales where total revenue equals total costs
    • In the Sweet Bites bakery case study, what were the total costs?
      £5,000
    • If a business has revenue of £50,000, fixed costs of £20,000, and variable costs of £15,000, what is the profit?
      £15,000
    • If a clothing store sells £50,000 worth of clothing, its revenue is £50,000.
      True
    • If fixed costs are £10,000 and variable costs are £5,000, what are the total costs?
      £15,000
    • Fixed costs are costs that do not change with the level of output
    • Profit is the surplus income after deducting all expenses
    • If a business has revenue of £50,000 and total costs of £35,000, the profit is £15,000
    • To calculate a loss, subtract total revenue
    • The break-even point in units is calculated as fixed costs divided by selling price per unit minus variable cost per unit
    • Variable costs increase as production increases.
      True
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