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COST, Revenue , profit
Lesson objectives
Difference between fixed and variable costs.
Difference between direct and indirect costs.
Difference between costs and revenue.
2 mins starter…
List as many costs in bread factory as you can….
Which are Fixed and Variable costs?
BREAD FACTORY
FIXED COSTS
Rent VARIABLE COSTS Wages
Costs
Fixed Costs (FC) – Do not change with output.
Variable costs (VC) change with output.
Total costs (TC) = FC + VC
Average Cost (AC) = TC/Quantity
Direct v Indirect
Direct costs = Variable costs
Indirect costs = Fixed costs
Revenue
2 girls sell 18 glasses of lemonade for $10.
How much money do they make?
18 x $10 = $180
Total Revenue (TR) is total sales
TR = Price x Quantity
Profit
This is what the entrepreneur gets after all costs have been paid.
Profit is the driving force behind every business and firm in operation.
Profit = TR – TC.
Can you figure out equations for
Revenue ____ x____ Profit = ___ - _____ Total cost = ___ + VC
Fc = VC =
AVERAGE COST = ____
Diagrams FC
VC
TC
TR
Lesson objectives
Difference between fixed and variable costs.
Difference between direct and indirect costs.
Difference between costs and revenue.