Business Pack 5

Getting deeper into IGCSE Business.

What is production?

The process of making goods or providing services.

What is productivity?

The amount of output produced compared with the resources used to produce it.

How can training affect productivity?

It provides workers with better skills, which can increase overall productivity.

What is a fixed cost?

A cost that does not change with the level of output.

What is an example of a fixed cost?

Rent.

What is a variable cost?

A cost that changes directly when output changes.

What is an example of a variable cost?

Raw materials.

What is the formula for total cost?

$$\text{Total Cost} = \text{Fixed Costs} + \text{Variable Costs}$$

If fixed costs are RM200 and variable costs are RM300, what is the total cost?

$$\text{RM500}$$

What is revenue?

The money received by a business from sales.

What is the formula for revenue?

$$\text{Revenue} = \text{Price} \times \text{Quantity Sold}$$

What is the total revenue when selling 50 units at a price of RM10 per unit?

$$\text{RM500}$$

What is the formula for profit?

$$\text{Profit} = \text{Revenue} - \text{Total Costs}$$

If revenue is RM800 and total costs are RM500, what is the profit?

$$\text{RM300}$$

Why is quality important for a business?

It can satisfy customers and encourage repeat purchases.