3.

2 Costs and
Revenues
 Different types of cost
•Fixed Costs contain an element of both fixed and variable
costs, they tend to charge additionally when
you exceed a certain limit
•Variable Costs costs that do not vary depending on the
level of output
•Semi Variable
costs that vary directly with the level of
Costs
output
Different types of costs
• Direct costs – costs that can •Indirect costs
be directly traced back to
the production of a product. (overheads) – Cannot
They can be fixed or be traced to
variable. This is generally production or sale of
used when firms produce
more than one product and
a single product.
use different cost centres. (administration
(direct labour, direct costs, security,
materials)
cleaning)
Some formulas you need to know
Cost Formulas:
•TC = TFC + TVC
•TVC = AVC x Q
•TFC = AFC x Q
•AC = TC / Q
 Revenue = Price x Quantity
Average Revenue = Total
revenue / Quantity

REVENUE
• Revenue is income received
STREAMS from sale of goods and services.
• Revenue streams are income
earned from methods other than
selling goods and services.