Fixed Costs - ANSWER Costs that do not change with output- they have to be paid regard-
less of how much a business produces
Variable Costs - ANSWER Costs that do change with output- these costs are directly
linked to the product or service
start up costs - ANSWER Costs that a business has to pay when the business sets up. For
examples, fixtures and fittings
Operating costs - ANSWER Costs that have to be paid for the day to day running of the
business. For example, heat, light, rent etc...
revenue - ANSWER This is the money that comes into the business. It is also known as
turnover or revenue
Profit - ANSWER This is the amount of money that the business earns AFTER paying for
all of its costs
Break even - ANSWER Level of output where total revenue = total costs
Margin of safety - ANSWER This is the difference between your break-even point and the
number of units you expect to sell
cash flow forecast - ANSWER This is a forecast the business makes for what it expects to
have coming into the business and out of the business
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less of how much a business produces
Variable Costs - ANSWER Costs that do change with output- these costs are directly
linked to the product or service
start up costs - ANSWER Costs that a business has to pay when the business sets up. For
examples, fixtures and fittings
Operating costs - ANSWER Costs that have to be paid for the day to day running of the
business. For example, heat, light, rent etc...
revenue - ANSWER This is the money that comes into the business. It is also known as
turnover or revenue
Profit - ANSWER This is the amount of money that the business earns AFTER paying for
all of its costs
Break even - ANSWER Level of output where total revenue = total costs
Margin of safety - ANSWER This is the difference between your break-even point and the
number of units you expect to sell
cash flow forecast - ANSWER This is a forecast the business makes for what it expects to
have coming into the business and out of the business
1
