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Unit 2
Finance for
Business

Name: ________________________

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Costs Involved in Business


What is a start up cost?

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What is an Operating cost?

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Which of the following are start up costs for a Painting and Decorating Business

Petrol for the van


The Van
Overalls for Staf
Paint

Wall paper paste


Paint Brushes
Wages

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For a Sandwich Shop Give three Start up costs


Give three
operating costs
1. __________________________
1. __________________________
2. __________________________
2. __________________________
3. __________________________
3. __________________________
For a DIY Shop Give three Start up costs
operating costs
1. __________________________
2. __________________________
3. __________________________

Give three
1. __________________________
2. __________________________
3. __________________________

For a Mobile Car Mechanic Give three Start up costs


Give three
operating costs
1. __________________________
1. __________________________
2. __________________________
2. __________________________
3. __________________________
3. __________________________
Jack is thinking of setting up his own business, selling used cars. He has found
a place to set up his business and needs some advise.
Using two examples, explain why Jack needs to make sure he has enough
money for start up costs (4 marks)

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Laura is setting up her own business selling fashion accessories she has made,
on Facebook and Instagram. Identify two start up costs and two running costs
that she would have
Start up Costs

Storage

Running Costs

Sewing Machine
Business Cards

Electricity
iPhone

Wif

Beads
Camera

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Thomas has sold a few of his old stuf on eBay and made a bit of money. He has
decided he could make this into a business, by buying old things cheap and
selling them for a proft.
Which of the following are examples of running costs for his business?
eBay fees
Buying a camera to photograph is
products
Buying items to sell

Setting up the online store


Buying business cards
His wages

What is meant by the term running cost?

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Businesses have both fxed and variable costs. Fred is getting confused at what
is a fxed and what is a variable cost. Explain what the 2 terms mean.

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Fred is making and selling fudge made from his familys famous recipe. He has
decided to open a store in Scarborough to sell his products. Suggest three fxed
costs for his business
1. _____________________________________
2. _____________________________________
3. _____________________________________
Now can you suggest two variable costs he might have
1. _____________________________________
2. _____________________________________
Complete this statement Packaging is usually a __________________ cost
because it does _________ with of the level of output.

Calculating Total Costs

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Total Costs = ________________________ +


________________________
Fixed costs Running Costs
Operating Costs

Start up costs

Variable Costs

Variable Costs = Cost of one Unit X __________________________


Now you have the formulas see if you can calculate the following:
Jack is making clocks. It costs him 3 to make one and his fxed costs are 50
per week. He has done some research and he predicts he will sell 30 per week.
Calculate his Variable Costs

Variable Cost =
___________
Calculate Jacks Total Costs

Total Cost =
___________
Emily designs bag and is selling them online. It costs 7 in materials to make
and her fxed costs are 20 per week. Calculate her Total costs for 25 bags.

Total Cost =
___________
She has been running the business for a while and gained lots of publicity. She
is now selling 45 bags per week. Calculate her new Total Cost.

Total Cost =
___________
A Business has the following monthly costs:
Fixed costs
Variable
Costs

500
12
item

per

What are the variable costs if they make 100?

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What are the fxed costs if they make 100 items?

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What are the total costs if they only make 30 items?

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Sources of Revenue
What does the term Revenue mean?

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Gavin owns a motor bike shop. He sells motorbikes and accessories as well as
servicing and fxing them in his repair centre next door. He also rents out a
space at the front of his shop to a guy that has a mobile burger van. Gavins
business is doing well and he has even got 10,000 in savings in the bank.
Identify three sources of fnance of Gavins Business
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
Stacy owns a small local gym. She makes money from the monthly subscription
her customers pay. The business is starting to struggle and Stacy is looking for
new ways she can make money from her business.
Suggest two other sources of income from customers
1. _____________________________________________________________________
2. _____________________________________________________________________
What of the following are examples of internal Sources of Finance?
Retained profts
Bank loan
Overdraft
Interest from Savings
Revenue from Sales
Mortgage
Which of the following are sources of revenue?
Retained profts
Paying Wages
Interest
Money for Repairs
Interest paid on bank Loan
Income from Renting
Betsy sells homemade cards that she makes at home. She sells them in the
local new agents and to friends and family. Suggest 2 ways she can increase
her revenue
1. ________________________________________________

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2. ________________________________________________

Revenue = ________________________ X ________________________


In a month, Jess sells 200 cupcakes. She sells each cupcake for 1.50. What is
her monthly revenue?
Monthly Revenue =
________________
Jess sells the 100 cupcakes every month to a caf. What is her yearly (annual)
revenue from this caf?
Annual Revenue =
________________
Gemma makes delicious homemade marshmallow and sells them as wedding
favours. She sells small gift wrapped marshmallow for 80p and large for 1.20.
In the last week Gemma sold 50 small and 80 large marshmallows.
What is her total revenue?
50 x 0.80 = ________
_________ x _________ = __________
Total Revenue = _________ + _________ = _________

Types of Expenditure
What does the term Expenditure mean?

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Which of the following are examples of expenditure for Thomass eBay shop.
eBay fees
Interest on Bank Savings
Buying items to sell

Money from Sales


His wages

Josh and Ryan sell print artwork in the local shopping centre at a kiosk. Suggest
2 items of expenditure they have.
1. ________________________________________________
2. ________________________________________________
Finish this statement:

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Overheads are everyday ____________________ of business.


Sophie makes homemade bath products like soaps and bath bombs. She sells
them on her market stall. Give 2 examples of overheads she may have.
1. ________________________________________________
2. ________________________________________________
Which of these is NOT an expenditure.
Rent
Utility Bills
Advertising costs
Sales from stock

Vehicles and Fuel


Consumable items