3.3 Costs and Revenues

Cost

Expenditure or amount paid to produce or sell a good or services, including the acquisition of business resources.

Revenue

Income earned or money generated from the sale of goods or services.

Profit

The positive difference between the revenue and the cost of operating a business.

Fixed Cost

Doesn’t change with the amount of goods or services produced, they must be paid regardless of the activities a business partakes within a given month.

Variable Costs

Costs that change with the number goods or services produced.

Direct Cost

Costs that can be identified with the production of specific goods or services

Indirect Costs (Overhead costs)

Costs that are not clearly identified with the production of specific goods or services.