1.3.2 Business revenues, costs, and profits

Cards (29)

  • What are the two main categories of business costs?
    Fixed and variable
  • The formula for calculating revenue is Revenue equals Price multiplied by Quantity.
  • The total revenue a business earns is equal to the price of each item sold multiplied by the quantity.
  • What is an example of a variable cost for a business?
    Raw materials
  • What does revenue refer to in business terms?
    Total income
  • Gross profit is calculated as revenue minus the cost of goods sold.
  • If a business sells 100 units at £5 per unit, what is the total revenue?
    £500
  • What is an example of a fixed cost for a business?
    Rent
  • The formula to calculate total costs is Fixed Costs plus Variable Costs.
  • What does gross profit exclude in its calculation?
    Operating expenses
  • What is included in the calculation of net profit?
    All expenses
  • What is the formula to calculate revenue?
    Revenue = Price x Quantity
  • Total costs are calculated by adding fixed costs and variable costs.
  • Match the type of profit with its formula:
    Gross Profit ↔️ Revenue - COGS
    Net Profit ↔️ Revenue - Total Expenses
  • Profit is the money a business earns after subtracting all costs from its revenue.

    True
  • Gross profit is calculated as revenue minus the cost of goods sold.
  • Revenue is calculated by multiplying the price by the quantity
  • Match the type of cost with its description:
    Fixed Costs ↔️ Costs that do not change with output
    Variable Costs ↔️ Costs that change with output
  • Gross profit is calculated by subtracting COGS from revenue.

    True
  • If a business has revenue of £100,000, COGS of £40,000, and other expenses of £10,000, what is the net profit?
    £50,000
  • The formula to calculate revenue is Price multiplied by Quantity.
  • Revenue is calculated by multiplying the number of items sold by the price of each item.

    True
  • Revenue helps businesses determine their total income from sales.
    True
  • Fixed costs remain the same regardless of the level of output.

    True
  • If a business has fixed costs of £2,000 and variable costs of £5 per unit for 100 units, what are the total costs?
    £2,500
  • What is net profit defined as?
    Revenue minus all costs
  • If a business sells 100 units at £5 each, the total revenue is £500.
    True
  • What are the two main types of profit?
    Gross and Net
  • Gross profit is calculated by subtracting the cost of goods sold (COGS) from revenue.