*GO OVER WITH PAPER* 2.2.2 Sales, Revenue & Costs

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4 Terms

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Types of costs

1. Fixed costs - Do not change with outpur/sales eg rent

2. Variable costs - Change directly with output eg raw material

3. Total costs - Sum of Fixed + Variable costs

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Contribution

Amount a unit contributes to paying off fixed costs

Once fixed costs are payed off, contribution starts to contribute to profits

Used to calculate break even point

Selling price per unit - Variable cost per unit

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