• 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 ...

    shop front or for some companies it may be the reception or even the sales administrators. Maintenance/Engineering - involves cleaning of the premises, repairs and involvement if a company is expanding a store or opening a new store. They would have to work closely with Health & Safety Health &

  2. Introduction to Business Assignment

    you would be able to operate with costs 20% lower than that of your nearest rival'8 What this means that if GE lighting dominate the lighting industry, they can produce on a larger scale than that of their rivals. It is also of the essence that GE lighting remain in

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

    can be put into the business. In 2006, Bill Gates announced a two year transition period from his role as Chief Software Architect, which would be taken by Ray Ozzie, and planned to remain the company's chairman, head of the Board of Directors and act as an adviser on key projects.[44] As of July 2007, Windows Vista is Microsoft's latest operating system, released in January 2007.

  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. Barclays Investigating a Business

    Develop Retail and Commercial Banking Activities in Selected Countries outside the UK By aiming to 'Develop retail and commercial banking activities in selected countries outside the UK' Barclays have created a profit driven objective. Wanting to expand internationally can mean high profit however there's also a high risk such as

  2. This is a detailed business report on Sainbsurys.

    Due to these factors it was a wise decision for Sainsburys to expand to a public limited company and build up the organisation they have today. Public limited companies must also: * Be a company limited by shares. * Have a Memorandum of Association with a separate clause stating that it is a public company.

  1. Applied Business Studies Unit 1: Investigating Business

    They are pieces of legislation focused on consumer rights, and try to get the consumer the best possible service when buying a product. In the case of Martin, for them this means they have to adhere to legislation on sale of goods, trade descriptions, supply of goods and services, consumer safety and weight and measures Act.

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

    the UK core?, because as Tesco?s is competitive they tend to keep their customers and attract newer customers or get customers from their competitors to defect to Tesco?s, this will then lead to more profits being generated which can be used to re-invest into the business.

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