Costs

Costs

1. reasons to classify costs

   • to assess the impact of changes in output on the costs of production
   • calculate the costs of making a particular product in a multi-product company

2. fixed assests

   • assets the business owns
   • paid for by owners, shareholders, retained profits
   • known as capital expenditure
   • other expenditure paid for with direct revenue

3. fixed costs

   • costs that do not vary with production in the short run

4. variable costs

   • costs that vary directly according to the level of output in the short run

5. price

   • amount paid to purchase the goods

6. total revenue

   • price x quantity
   • income recieved

7. profit

   • TR - TC
   • difference between the income and its total costs