3.3) Costs and Revenues

cost

the payments a business must make as part of its operations

revenue

income generated from the sale of goods or services

fixed cost

costs of production that do not change with the level of output

variable cost

costs of production that changes according to the level of output

semi variable cost

costs that contain an element of both FC and VC

• tend to change only when production or sales exceed a certain level

direct costs

costs that can be clearly and specifically identified with the output of a certain product

indirect costs (overheads)

costs that cannot be clearly idenfied with the production or sale of a particular good or service

revenue streams

various sources of income

profit centers

departments in an organization that are responsible for generating their own results and earnings