3.3. Cost and revenue

Fixed cost

A cost that does not change with an increase or decrease in the number of goods and services produced or sold.

Examples of fixed costs

Rent on leased premises, market research, interest payments on bank loans, management salaries, advertising expenditure, security

Examples of variable costs

raw materials, wages, commission payments to staff, utilities, packaging, repair, and maintenance

Variable cost

A corporate expense that changes in proportion to how much a company produces or sells.

Direct cost

A cost that can be directly tied to the production of specific good or services.

Indirect cost (overhead)

A cost that cannot be directly attributed to a specific production, or sale, or other activity

Total revenue

Price X Quantity-all the money taken in

Revenue

The income a business receives from selling its goods and services.

Revenue streams

A business's earnings from its full range of trading activities.

Types of revenue streams

dividends, advertisements, donations, bank deposits, subscription fee, merchandise, sponsorship

Total cost

fixed cost + variable cost

Examples of overheads

management salaries, wages paid to security staff, othe