Which term describes costs that do not change no matter how many products are sold?
Fixed costs
What is meant by wages?
Pay for hourly work that varies with the level of output
What is meant by loan interest?
The charge on money borrowed that is paid each month
What is the name for the electricity, gas and water that a business must pay for?
Utilities
What is meant by total costs?
The fixed costs and variable costs of a business added together
Which term describes the total costs of a business divided by the number of units sold?
Total cost per unit
What is meant by variable costs?
Costs that change in line with the level of output
What is meant by a salary?
Pay set at a yearly amount and paid in equal monthly amounts
What is calculated by dividing total variable costs by the number of units produced?
Variable cost per unit
Which of these is a variable cost for a business?
Packaging
Why is advertising treated as a fixed cost?
It must be paid even if no sales are made
A business pays its manager a monthly salary and pays its packers by the hour. Which statement is correct?
Salary is fixed, wages are variable
A business repays £250 a month on a loan, of which £40 is interest. Which amount is a fixed cost?
The £40 of interest
Which of these is treated as a fixed cost, even though the amount used can rise with output?
Utilities
A business has fixed costs of £1,500 and variable costs of £2,300 for a month. What are its total costs?
£3,800
A business sells 1,000 units. Its fixed costs are £2,000 and its variable costs are £3,000. What is the total cost per unit?
£5
A business has total costs of £7,500 in March and variable costs of £3,000. What are its fixed costs?
£4,500
A business pays rent of £500 a month and insurance of £40 a month. What are its total fixed costs for one year?
£6,480
A business makes 400 units. Raw materials cost £3 per unit and packaging costs £1 per unit. What are its total variable costs?
£1,600
A business doubles the number of units it produces. What happens to its total fixed costs?
They stay the same
A business pays insurance of £1,200 a year and rent of £450 a month. What are its total fixed costs for one month?
£550
A business has monthly fixed costs of £2,400. It sells 400 units in April and 600 units in May. What is its fixed cost per unit in May?
£4
A business makes 250 units. Its total cost per unit is £8 and its variable cost per unit is £3. What are its total fixed costs?
£1,250
What is meant by 'total revenue'?
The selling price of a product multiplied by the number of units sold
What is meant by 'selling price per unit'?
The amount of money a customer is charged for one item
What is the name for the quantity of products that customers buy from a business over a period of time?
Number of sales
What is meant by 'annual revenue'?
The income received from sales over a full year
Which calculation is used to find the number of sales when the total revenue and the selling price per unit are known?
Total revenue divided by the selling price per unit
What is meant by the term revenue?
The income a business generates from its sales
A shop sold 300 phone cases at £6.50 each. What was the total revenue?
£1,950
A sandwich shop sold 40 coffees at £3 each and 25 cakes at £4 each. What was its total revenue?
£220
A dog walker charges £12 per walk and completes 8 walks a day, 5 days a week. What is her weekly revenue?
£480
A business sells 250 units a month at £9 each. What is its total revenue for a year?
£27,000
A business generated £1,800 in revenue from selling 450 units. What was the selling price per unit?
£4
A business sells its product for £15 each and its revenue for the month was £4,500. How many units did it sell?
300
A bakery sold 120 loaves in June and 150 loaves in July, all at £2.50 each. How much more revenue did it generate in July than in June?
£75
A business cut its price from £10 to £8 and sales rose from 300 units to 450 units. What happened to its revenue?
It increased by £600
A window cleaning business cleaned 150 windows each week for four weeks and generated £4,200 in revenue. What did it charge for each window?
£7
A tutor charges £22 an hour. Each lesson lasts two hours and she teaches nine lessons a week. What is her revenue for four weeks?
£1,584
Amara sells 60 items at £4.50 each. Ben sells 100 items at £2.80 each. Who generates more revenue, and by how much?
Ben, by £10
A nail bar completes 15 manicures a week at £18 each and 8 pedicures a week at £25 each. What is its revenue for four weeks?
£1,880
Which term describes the income a business receives from selling its goods or services before any costs are taken away?
Revenue
Which term describes the sum of fixed costs and variable costs for a given level of output?
Total costs
What is meant by 'total costs per unit'?
The cost of producing one single item, including both fixed and variable costs
What is meant by 'selling price per unit'?
The amount a business charges customers for one single item
Which term describes the amount by which the total cost per unit is greater than the selling price per unit?
Loss per unit
Which formula is used to calculate the profit for a given level of output?
Total revenue minus total costs
Which statement describes the difference between revenue and profit?
Revenue is the income from sales, while profit is what is left after total costs are taken away
When does a business make a loss?
When total costs are greater than revenue
How is profit per unit calculated?
Selling price per unit minus total cost per unit
A business sells 500 units at £8 each. Its total costs are £3,000. What is its profit per unit?
£2
A business has total revenue of £7,200 and total costs of £5,400. What is its profit?
£1,800
A business has revenue of £9,500, fixed costs of £2,800 and variable costs of £3,700. What is its profit?
£3,000
A business made a profit of £650 last month with revenue of £2,000. What were its total costs?
£1,350
A business makes a profit of £4 per unit and its total cost per unit is £11. What is its selling price per unit?
£15
A business has total costs of £8,600 and revenue of £7,200. What is its loss?
£1,400
A product has a total cost per unit of £14 and a selling price per unit of £9. What does this mean for the business?
It makes a loss of £5 on each unit sold
A business sells 500 units at £14 each. What is its total revenue?
£7,000
A business has fixed costs of £700 per month and variable costs of £4 per unit. It sells 6,000 units a year at £9 each. What is its annual profit?
£21,600
A business makes £4 profit on each unit it sells. How many units must it sell to make a total profit of £2,000?
500
A business makes a profit of £2 on each unit it sells. Its variable cost per unit then rises by £3 and it cannot raise its selling price. What is the result?
It makes a loss of £1 on each unit sold
A business sells 400 units at £15 each. The total cost per unit is £9. What is its total profit?
£2,400
Which term describes the money that a business has immediately available, either to hand or in a bank account?
Cash
What is meant by 'profit'?
The amount left when total costs are subtracted from revenue
Which term describes a situation where a business's total costs are greater than the revenue it receives?
Loss
What is meant by 'revenue'?
The income a business generates from selling its goods or services
Which term describes a business being unable to pay its debts as they fall due?
Insolvency
What is meant by 'liquidation'?
Selling off a business's assets and closing the business down
Which term describes the items a business owns, such as vehicles, equipment and stock, that it can sell to raise cash?
Assets
Why is a business's profit not the same as its cash?
Profit only becomes cash once the customer has paid and the money has cleared
Why does a new enterprise need cash even when it is not yet making a profit?
So it can pay its bills when they are due
A business made a profit of £3,000 last month but has almost no cash. Which is the most likely reason?
Its customers bought on credit and have not paid yet
A business owes its main supplier £2,000 but has no cash to pay. What is a likely consequence?
The supplier may refuse to sell to it again
A business that is short of cash sells its delivery van to pay its bills. Which consequence of a lack of cash is this?
Selling assets to raise cash
A business cannot pay its rent on time because it has run out of cash. What is the most likely consequence?
It will be charged a penalty for paying late
Which of the following is NOT a consequence of a lack of cash?
Its lenders trust it more
A business has borrowed money several times to pay its bills and has paid some of them late. What is the most likely result?
It will find it harder to borrow money in future
A business that keeps running out of cash stops advertising and reduces the hours its staff work. Which consequence of a lack of cash is this?
Cutting costs
Which of the following is an example of a business borrowing money because it has run out of cash?
Taking out a bank overdraft
A shop has run out of cash and cannot pay its supplier for new stock. What is the most likely result?
It will have fewer products to sell
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