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3.2: Costs and Revenue (Revenue (revenue: the income received from the…

- - - - factory rent and rates
      - depreciation of equipment and power
    - - warehouse, packing and distribution costs
      - salaries of sales staff
    - - office rent and rates
      - clerical and executive salaries
    - - interest on loans
  - - - variable costs: costs that vary with output
      - direct cost of materials
      - the electricity used
      - if nothing is produced or sold then variable costs will be zero.
    - - fixed costs: costs that do not vary with output in the short run
      - remain fixed no matter what the level of output (rent of premises)
    - - semi-variable costs: costs that have both a fixed and a variable cost element
      - electricity standing charge plus cost per unit used
      - sales person’s fixed basic wage plus a commission that varies with sales