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COSTS AND REVENUES, are, are, is, and, are, its formula is, e.g., are, its…
COSTS AND REVENUES
Key concepts
Profit (P)
Calculated by finding out the difference between revenue and cost.
Important factors for effective decision making in the business
are
Revenue (R)
Price x Quantity
Revenue streams
Rental income, donations, grants and subsides
A measure of the money generated from the sale of goods or services.
Cost (C)
The total expenditure incurred by a business
Types of costs
are
Semi-Variable Cost
The mixture of fixed cost and variable cost
Electricity costs
Total Cost (TC)
The sum of the variable cost and fixed cost
TC=VC+FC
Variable Cost (VC)
Costs of production that vary in proportion to the business activity
Raw materials, packaging
VC=Quantity x Unit Cost
Direct Cost
attributed to the production of specific goods or services
Direct materials, direct labour
Fixed Cost (FC)
Costs that don't change with the level of production
Rent, salaries, inssurance and interest payments
FC=TC-VC(Quantity)
Indirect Cost
Not directly accountable to a cost object
Audit fees, interest on loans
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