Calculations

• What is revenue in a business context?

  Money from customers for purchases
• How is Total Revenue calculated?

  Total Revenue = Selling Price × Number of items sold
• What is Gross Profit?

  Gross Profit = Total Revenue - Cost of Sales
• What is Net Profit?

  Net Profit = Total Revenue - Total Costs
• What are Fixed Costs (FC)?

  Costs that do not vary with output
• How do Fixed Costs behave regardless of production levels?

  They remain the same regardless of output
• What are Variable Costs (VC)?

  Costs that vary with output
• How do Variable Costs change with production levels?

  They increase as more bags are produced
• How can Total Costs be calculated?

  Total Costs = Fixed Costs + Variable Costs
• How is Average Cost calculated?

  Average Cost = Total Costs ÷ Output
• What are the key differences between Fixed Costs and Variable Costs?

  • Fixed Costs:
  • Do not change with output
  • Examples: rent, salaries
  • Variable Costs:
  • Change with output
  • Examples: raw materials, overtime wages
• What is it called when the total profit is negative?

  Loss
• How do you calculate percentage change?

  (New Value - Old Value) ÷ Old Value × 100