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.

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.

IBBusinessDPBusiness ManagementHLFlashcards3. Finance & Accounts3.3 Costs & Revenues

3.3 Costs & Revenues (DP IB Business Management)

Flashcards

1/20

0Still learning

Know0

FrontTypes of Costs
Define the term fixed costs.

Enjoying Flashcards?
Tell us what you think

Cards in this collection (20)

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.
$Sales revenue = Quantity sold x Selling price$
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.
$Average selling price = \frac{Sales revenue}{Number of items sold}$

Previous:3.2 Sources of FinanceNext:3.4 Final Accounts

1. Introduction to Business Management

2. Human Resource Management

3. Finance & Accounts

4. Marketing

5. Operations Management

6. The Business Management Toolkit

6.1 The Business Management Toolkit