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Direct cost
cost clearly linked to production
Indirect cost
costs not clearly linked to production
Fixed costs (FC)
costs that don’t change regardless of level of output
Variable costs (VC)
costs that do change w/ level of output
Marginal costs
extra cost of producing 1 more unit
Avg cost formula
total cost/total output
As ↑output, ↓avg c__, to a point
> too much output = more s__ workers needed = more cost
cost, skilled
Total costs (formula)
FC + VC
What is this?
TC
What is this?
VC
What is this?
FC
Revenue: what firms e__ from s__ of goods/services
Total revenue (TR) = $/unit x Qsold
> Avg revenue = total rev / total Qsold
earn, sale
When does breakeven occur?
total revenue = TC
Contribution formula
selling $ - VC
Breakeven formula
FC/contribution