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IBBusinessDPBusiness ManagementHLFlashcards3. Finance & Accounts3.3 Costs & Revenues

3.3 Costs & Revenues (DP IB Business Management)

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  • Define the term fixed costs.

    Fixed costs are those that do not change as the level of output changes.

  • What are variable costs?

    Variable costs are those that vary directly with the output.

  • True or False?

    Total costs are the sum of fixed and variable costs.

    True.

    Total costs are the sum of fixed and variable costs.

  • State two examples of fixed costs for a retail business.

    Examples of fixed costs for a retail business include:

    • Rent

    • Utilities

    • Salaries

    • Insurance

    • Bank loan repayments

  • What are direct costs?

    Direct costs are related to the production of a particular product and vary directly with output.

  • What are indirect costs?

    Indirect costs are costs that cannot be allocated easily to the production of a particular product.

  • True or False?

    Direct costs are often the same as fixed costs.

    False.

    Direct costs are often the same as variable costs.

  • State another term for indirect costs?

    Another term for indirect costs is overheads.

  • Give an example of a variable cost for a construction business.

    Examples of variable costs for a construction business include:

    • Raw materials, such as bricks and cement

    • Components, such as kitchen units or radiators

    • Employee wages

  • True or False?

    Administration expenses are an example of a direct cost.

    False.

    Administration expenses are an example of an indirect cost.

  • Define the term sales revenue.

    Sales revenue is the value of units sold by a business over a period of time.

  • State the equation to calculate sales revenue.

    Formula.

    Sales space revenue space equals space Quantity space sold space straight x space Selling space price

  • What is a revenue stream?

    A revenue stream is a source of revenue other than sales.

  • True or False?

    Dividends are a type of revenue stream.

    True.

    Dividends received from investments in other companies are a type of revenue stream.

  • Which type of organisation typically receives donations as a revenue stream?

    Not-for-profit organizations, such as charities, typically receive donations as a revenue stream.

  • What are subscription fees?

    Subscription fees are regular, ongoing fees that allow users to access a product or service.

  • True or False?

    Sponsorship is not a valid revenue stream.

    False.

    Sponsorship is a valid revenue stream.

  • True or False?

    Interest is a cost, rather than a revenue stream.

    False.

    Interest can be a revenue stream when earned from bank deposits.

  • True or False?

    Online social media businesses generate the majority of their revenue from merchandise.

    False.

    Online social media businesses generate the majority of their revenue from advertising.

  • How is the average selling price calculated?

    Formula.

    Average space selling space price space equals space fraction numerator Sales space revenue over denominator Number space of space items space sold end fraction

Previous:3.2 Sources of FinanceNext:3.4 Final Accounts

    1. Topic 1

      1.1 What is a Business?

    2. Topic 2

      1.2 Types of Business Entities

    3. Topic 3

      1.3 Business Objectives

    4. Topic 4

      1.4 Stakeholders

    5. Topic 5

      1.5 Growth & Evolution

    6. Topic 6

      1.6 Multinational Companies (MNCs)

    1. Topic 1

      2.1 Introduction to Human Resource Management

    2. Topic 2

      2.2 Organisational Structure

    3. Topic 3

      2.3 Leadership & Management

    4. Topic 4

      2.4 Motivation & Demotivation

    5. Topic 5

      2.5 Organisational (Corporate) Culture

    6. Topic 6

      2.6 Communication

    7. Topic 7

      2.7 Industrial Relations

    1. Topic 1

      3.1 Introduction to Finance

    2. Topic 2

      3.2 Sources of Finance

    3. Topic 3

      3.3 Costs & Revenues

    4. Topic 4

      3.4 Final Accounts

    5. Topic 5

      3.5 Profitability & Liquidity Ratio Analysis

    6. Topic 6

      3.6 Efficiency Ratio Analysis

    7. Topic 7

      3.7 Cash Flow

    8. Topic 8

      3.8 Investment Appraisal

    9. Topic 9

      3.9 Budgets

    1. Topic 1

      4.1 Introduction to Marketing

    2. Topic 2

      4.2 Marketing Planning

    3. Topic 3

      4.3 Sales Forecasting

    4. Topic 4

      4.4 Market Research

    5. Topic 5

      4.5 The Marketing Mix (7 P's)

    6. Topic 6

      4.6 International Marketing

    1. Topic 1

      5.1 Introduction to Operations Management

    2. Topic 2

      5.2 Operations Methods

    3. Topic 3

      5.3 Lean Production & Quality Management

    4. Topic 4

      5.4 Location

    5. Topic 5

      5.5 Break-Even Analysis

    6. Topic 6

      5.6 Production Planning

    7. Topic 7

      5.7 Crisis Management & Contingency Planning

    8. Topic 8

      5.8 Research & Development (R&D)

    9. Topic 9

      5.9 Management Information Systems

    1. Topic 1

      6.1 The Business Management Toolkit