Business Management: Costs and Revenues

Vocabulary flashcards covering key concepts from Topic 3: Finance and Accounts, subtopic 3.3 Costs and Revenues.

Costs

The expenditure incurred in producing a good or service.

Set-up costs

Items of expenditure needed to start a business.

Running costs

The ongoing costs of operating a business.

Fixed costs

Costs of production that a business must pay regardless of how much it produces or sells, remaining payable even if output is zero.

Variable costs

Costs of production that change in proportion to the level of output, equaling zero when output is zero.

Total costs

The value obtained by adding total fixed costs to total variable costs ($\text{Total costs} = \text{TFC} + \text{TVC}$).

Direct costs

Costs specifically related to an individual project or the output of a particular product.

Indirect/overhead costs

Costs that cannot be clearly traced to the production or sale of any single product and are difficult to identify with a specific business activity.

Sales revenue

Money coming into a business earned from selling goods and/or services, calculated as $\text{Sales revenue} = \text{Price} \times \text{Quantity sold}$.

Revenue streams

Means or channels through which money comes into a firm other than direct sales revenue, such as advertising, subscriptions, royalties, or dividends.

STEEPLE analysis

A business management toolkit used to evaluate external environmental factors impacting a business: Social, Technological, Economic, Environmental, Political, Legal, and Ethical.

Fortescue Future Industries (FFI)

A green energy company whose mission is to produce zero-carbon fuel and pursue sustainability through revenue maximization.

Cathay Pacific

An airline severely impacted by the COVID-19 pandemic that undertook drastic cost control to adapt to changing external conditions and ensure business survival.