Studied by 3 people
Revenue
Business income or earnings over a period of time
Formula for revenue
Price per unit x Quantity
Difference between revenue and profit
Revenue: income brought into business, Profit: revenue minus the costs
Revenue Streams
Various sources from which a business can earn money, can be active or passive income
Examples of Revenue Stream
Consulting Services, Subscriptions, dividends from investments, merchandise
Advantages of Revenue Stream
Should lead to higher revenue, form of diversification (support struggling product), motivating for employees
Disadvantages of Revenue Stream
Business can lose focus & confuse customers, usually means more cost and workers, could fail which is waste of time & resources
Turnover
The amount of money taken by a business in a particular period
Cost
Expenditure or amount paid to produce or sell a good or service
Profit
Calculated by subtracting costs from revenue
Fixed Costs
Costs that don’t change no matter the level of output
Variable Costs
Costs that vary or change with the number of goods or services produced
Semi Variable
Include both a fixed or variable element
Direct Costs (operating/VC/COGS)
Costs than can clearly be identified with each unit of production & can be allocated to a cost centre
Indirect Costs (overhead costs that are for general functioning of business)
Can’t be clearly identified with the unit of production of a product or service
Examples of Fixed Cost
Rent, insurance, salaries
Examples of Variable Cost
Raw materials costs, sales, energy usage costs
