The costs that do not change as a business changes the amount it 102 FIXED COSTS produces. 103 VARIABLE COSTS Those costs that rise as business increases production and fall when it reduces production 104 TOTAL COSTS The fixed and variable costs of a particular level of production added together. The cost of each unit produced also known as unit cost 105 AVERAGE COSTS – 106 BREAK-EVEN POINT When total revenue is equal to total cost. Profits are zero. Break-even output is the number of items needed to be sold in order to break-even. Fixed costs divided by price variable costs 107 BREAK-EVEN – FORMULA When prices of a range of goods and services increase 108 INFLATION throughout the economy. 109 INTEREST RATE The charge made to businesses and people by a bank for lending money. Also a reward given by the bank for saving money. 110 OVERDRAFT A short term method of finance. The bank allows the business to withdraw more than is in their current account. Interest charged is high. 111 TRADE CREDIT Goods and materials are obtained from a supplier and payment is made at a later date. Profit which is kept by the business for its own use. 112 RETAINED PROFIT 113 HIRE PURCHASE A business uses equipment but does not own it until the final payment has been made. Finance is raised from selling shares. This finance does not 114 SHARE ISSUE have to be paid back. However, dividends will need to be paid and shareholders can vote. Only can sell Plc’s like AS plc shares on the stock exchange. 115 MORTGAGE Allows a business to borrow a large sum of money to purchase or improve a building 116 GROSS PROFIT Sales revenue minus cost of sales (variable costs). 117 NET PROFIT Gross profit minus all expenses. 118 OPPORTUNITY COST The cost of having to miss out on something else. A statement showing the expected flow of money into and out 119 CASH FLOW FORECAST of the business over a period of time. A market in which there are a large number of sellers, all 120 PERFECT COMPETITION competing for customers. 121 MONOPOLY When one single business has least a 25% share of the market.
102 FIXED COSTS The costs that do not change as a business changes the amount it produces. 103 VARIABLE COSTS Those costs that rise as business increases production and fall when it reduces production 104 TOTAL COSTS The fixed and variable costs of a particular level of production added together. 105 AVERAGE COSTS The cost of each unit produced – also known as unit cost 106 BREAK-EVEN POINT When total revenue is equal to total cost. Profits are zero. Break-even output is the number of items needed to be sold in order to break-even. 107 BREAK-EVEN FORMULA Fixed costs divided by price – variable costs 108 INFLATION When prices of a range of goods and services increase throughout the economy. 109 INTEREST RATE The charge made to businesses and people by a bank for lending money. Also a reward given by the bank for saving money. 110 OVERDRAFT A short term method of finance. The bank allows the business to withdraw more than is in their current account. Interest charged is high. 111 TRADE CREDIT Goods and materials are obtained from a supplier and payment is made at a later date. 112 RETAINED PROFIT Profit which is kept by the business for its own use. 113 HIRE PURCHASE A business uses equipment but does not own it until the final payment has been made. 114 SHARE ISSUE Finance is raised from selling shares. This finance does not have to be paid back. However, dividends will need to be paid and shareholders can vote. Only Plc’s like AS plc can sell shares on the stock exchange. 115 MORTGAGE Allows a business to borrow a large sum of money to purchase or improve a building 116 GROSS PROFIT Sales revenue minus cost of sales (variable costs). 117 NET PROFIT Gross profit minus all expenses. 118 OPPORTUNITY COST The cost of having to miss out on something else. 119 CASH FLOW FORECAST A statement showing the expected flow of money into and out of the business over a period of time. 120 PERFECT COMPETITION A market in which there are a large number of sellers, all competing for customers. 121 MONOPOLY When one single business has least a 25% share of the market.