Financial terms and calculations (AQA GCSE Business): Flashcards
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14 cards from this deck
Fixed costs definition
Fixed costs definition
Costs that stay constant regardless of production level
Variable costs definition
Variable costs definition
Costs that change in direct proportion to output
Total costs formula
Total costs formula
Fixed costs + Variable costs
Revenue formula
Revenue formula
Selling price per unit × Quantity sold
Profit formula
Profit formula
Sales revenue - Total costs
Total variable costs formula
Total variable costs formula
Variable cost per unit × Output level
Break-even point
Break-even point
Where total revenue equals total costs
Margin of safety
Margin of safety
Difference between current sales & break-even point
ARR formula
ARR formula
(Average annual profit × 100) ÷ Initial investment cost
When total sales > total costs
When total sales > total costs
Profit
When total sales < total costs
When total sales < total costs
Loss
Why control costs?
Why control costs?
Higher costs reduce profits & are the primary cause of cash flow problems
Example of fixed cost
Example of fixed cost
Rent, salaries, insurance premiums
Example of variable cost
Example of variable cost
Raw materials, commission payments