COSTS

1. COSTS COSTS are the money that a business has to pay out to keep the business running. • Buying stock • Paying Wages • Telephone bills • Rent

2. TYPES OF COST Click the boxes – Once for ‘Yes’, twice for ‘No’ Check answers Yes No Yes No Yes No Yes No Yes No Yes No

3. TYPES OF COST Click the boxes – Once for ‘Fixed’, twice for ‘Variable’ Check answers Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable

4. A FIXED COST Does not changewith the number being made or sold This does not mean that fixed costs can never change… e.g. your landlord may put your rent up the local council might put up the business rates the bank may put up the interest on your bank loan

5. A VARIABLE COST Varies with the number being produced or sold Usual example is the raw material cost of what is being made.. e.g. a sandwich bar would have bread, butter, cheese, tuna, mayo, etc as variable costs because the cost of these things will be different depending on the number of sandwiches being sold….the more sandwiches sold the more bread the sandwich bar will have to buy.

6. Jane makes soft toys in her spare time… …a very small business. Jane’s Costs: Bank Loan repayment £50 per month Materials £5 per toy Reveal answers

7. Click the boxes to reveal the graph lines Drawing the Cost Lines Total Cost Fixed Cost Variable Cost Click to select a marker and drag it to plot the graph

8. Jane’s Sales Sold £15 Jane sells her toys for £15 each This is known as her PRICE Reveal answers

9. Break even point Drawing the Cost & Revenue Lines Total Revenue Total Cost Fixed Cost Variable Cost Click to select the marker and drag it to plot the graph Break even output

10. Drawing the Cost & Revenue Lines Click here to show loss Click here to show profit Total Revenue PROFIT Total Cost Fixed Cost LOSS Variable Cost Break even output