Money By pippa oldacre

What does variable cost mean?

It's cost that can change with different reasons: 'cost that varies with the level of output'

What is fixed cost ?

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any business activity.

What is total cost?

Total cost is the cost of the variable and fixed cost added together.

What is sales revenue?

Revenue is the income earned by a business over a period of time, eg one month. The amount of revenue earned depends on two things - the number of items sold and their selling price. In short, revenue = price x quantity.

How do you work out profit?

Put simply, profit is the surplus left from revenue after paying all costs. Profit is found by deducting total costs from revenue. In short: profit = total revenue - total costs.

For example, if a firm has a total revenue of £100,000 and a total cost of £80,000, then they are left with £20,000 profit.

This is a question for you to what is the difference between variable and fixed cost and give 3 examples.

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