Importance of production cost, revenue and profit

Business objectives

Goals that a business aims to achieve, these are usually linked to profit, growth or increasing market share

Costs

Outgoings or overheads - things that the business has to pay for, divided into fixed and variable cost

Fixed Costs

Regardless of sales, outgoings that don’t change from month to month (eg. rent, fixed utility payments)

Variable Costs

Costs that change with production volume (eg. raw materials, fuel for delivery, avertising)

Revenue

Amount of money made from selling goods and / or services (aka sales revenue / turnover / income)

Profit

Amount of money a producer is left with after all cost have been paid (total revenue - total costs = profit)

Public Sector

• Organisations provided by the government

• We don’t directly pay for these services - they’re largely funded by tax

• Eg. state schools, NHS healthcare, refuse collection (bins), police and fire brigade

Private Sector

• Where private businesses trade

• This could be a sole trader - such as a self- employed teacher, solicitors owning + running a partnership together or a large company such as Tesco - owner by shareholders

Not For Profit Sector

• This sector incorporates voluntary and charitable organisations ie. Oxfam + Cancer research

• Recipients don’t pay for service - largely funded by grants, bequeathals + fundraising

Aim vs Objective

• Aim is a long term goal of a business

• Objective are the individual things done to achieve the aim