Business Studies A1 and A2

Costs
1. Direct costs ( Variable Costs)
  1. These are costs that are directly related to the production process.
2. Indirect costs ( Fixed Costs)
  1. These are costs that cannot be directly related to the production process.
3. This is what a business spends its money on, such as wages and materials.
4. Start-up costs
  1. When a business starts up, money needs to be raised to allow the business to start trading. However these are one off costs.
Total costs
1. The formula for total costs is:
  1. Total costs = Fixed costs + Variable costs
2. In order to work out the total costs you need to:
  1. Multiply the variable cost per unit by the number made / sold.
  2. Add that total ( the variable costs that are mentioned above) to the fixed costs.
Revenue
1. This is all the money coming into the business ( the income ) from selling its goods and services.
2. Sources of revenue:
  1. This is the various ways in which a business can recieve income.
3. The formula for revenue is :
  1. Revenue = number of sales x price per unit
Expenditure
1. This is the money that business pays out . ( COSTS)
2. Overheads
  1. Overheads is the everyday running costs of a business
3. Types of expenditure include:
  1. Utility bills
  2. Telephone bills
  3. General maintenace costs
  4. Wages
Investment
1. This is putting money into something with the expectation of a gain.
Security
1. These are assets that the business owner pledges to the bank in oreder to recieve a business loan.

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