• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Business Costs There are three main types of business costs.

Extracts from this document...

Introduction

Fact file a) Fixed costs have to be paid regardless of how much is produced, for example, rent and rates. b) Variable costs are directly related to the amount produced or sold, for example, raw materials, and stock for resale. Business Costs There are three main types of business costs. Start-up costs - These are gained before a business begins to operate, such as the purchase of land, building and equipment. __________________________________________________ Fixed costs - These are incurred once a business is running, no matter how many products it sells or how many customers it has. A car manufacturer has to pay heating bills whether it sells one car a day or a hundred. Fixed costs are also called indirect costs. They have to be paid whether the business is busy or quiet. ...read more.

Middle

If a shop sold 200 cones in a day, the total variable cost for that day would be: 14p x 200 = 2800p = �28.00 ___________________________________________________ Total costs - Businesses need to know how much money they are spending altogether and how much they're going to pay, i.e. total costs. This is the total fixed costs and the total variable costs added together. ___________________________________________________ Key terms a) Start-up costs are costs incurred before a business starts or when it is expanding or going into a new venture. b) Operating costs are costs a business incurs once it is up and running. Variable and fixed costs added together are known as operating or running costs. Revenue Revenue is the income received by a business from all sources. Sales - These are the main source of revenue for most organizations because customers pay for the goods or services they buy. ...read more.

Conclusion

For example, a newsagent might receive �4,000 income in a week from selling papers, magazines, sweets and other items. If it costs her �2,500 to buy these goods then the gross profit for that week is: �4,000 - �2,500 = �1,500 The amount spent by the newsagent on the papers, sweets and other stock is called cost of sales. So the formula for calculating gross profit is: Gross profit = Sales income - Cost of sales Net profit Net profit is calculated by subtracting other expenses from the gross profit. If the newsagent spends �1,000 on operating costs such as business rates, wages for part time staff, heating, rent, business rates etc., the net profit is: �1,500 - �1,000 = �500 So, the formula for the calculating net profit is Net profit = Gross profit - Operating costs Milla Jay UNIT 3.1 Understanding costs, revenue and profit for business. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. The Business Environment Coursework. Describe the type of business, purpose and ownership of ...

    For starters the store managers need to see that there is a need to employ someone. Then the administration department need to write a job description and advertise. CV's or application forms are sent in and need to be read and interviews need to be arranged.

  2. "Reducing Logistic Costs for Ladner Building Products"

    (See exhibit D) For local runs, the carriers were paid a high hourly salary ($34), and a relatively low per kilometre rate ($0.37). As a result, for Ladner to reduce its transportation costs for local runs, it should minimize the travelling time.

  1. Introduction to Business Assignment

    GE lighting are achieving this by manufacturing the best quality lighting components from the objective above and have a quality assurance system in place to trace where the mistakes went wrong if there were any at all. Having said that, with a quality assurance system in place, GE lighting are

  2. Btec National Business Level 3 Year 1 - Exploring Business Activity

    Government agencies - these are bodies that have been set up by the government to take responsibility for a particular activity. For example, the government is the Oxfam saver as well and the child protection agency is a government - funded body responsible for looking after the rights of children.

  1. Types of Business Structures.

    company name as a warning to creditors that they may not get paid if the business fails; * You have to draw up company rules called "Memorandum and Articles of Association" which are registered with the Companies Registration Office. The articles define the powers of the directors and voting rights,

  2. This is a detailed business report on Sainbsurys.

    * Trading PLC can result in hefty administrative expenses. A public limited company has its shares bought and sold on the Stock Exchange. Sainsburys have to go to the expense of having a 'full quotation' on the Stock Exchange so their share prices appear on the dealers' visual display screens.

  1. external influences on a business

    So for example, an increase in interest rates will make it more expensive to borrow money from bank for example for investment. It is not just interest rates which affect Morrisons but after economics factors as well such as inflation, business cycle, employment and it is not just trends in

  2. Investigating Business. Tesco PLC. I will be describing the aims and objectives of ...

    Tesco?s personal belief that that competitive pricing and new product launches would boost sales in the Christmas season. The "Big Price Drop" covers a total of 3,000 products including essential items like milk, eggs, fruits and vegetables. This contributes to the success of Tesco?s in achieving their objective ?to grow

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work