Topic A.1 Understand the
costs involved in business
Learners should:
§ Understand and identify costs of a
business, including:
Ø Start-up
costs the costs incurred when setting up a business
Ø Operating
(running) costs the costs incurred in the day-to-day running of a
business
§ Understand, define and identify the
differences between fixed and variable costs, direct and indirect costs, total
costs
§ Calculate total costs (formula will not be given in the assessment)
Total costs = Fixed costs + Variable
costs
Topic A.2 Understand how
businesses make a profit
Learners should:
§ Understand and identify how businesses
make money (generate revenue) from selling their products or services
§ Identify sources of revenue for a
business
§ Calculate revenue (formula will not be given in the assessment)
Revenue = Number of sales x price per
unit
§ Describe how businesses have to spend
money (expenditure) in order to succeed
§ Identify types of expenditure (including
overheads) businesses may have
§ Understand that expenditure is anything a
business pays out and overheads are the everyday running costs of a business
§ Understand that businesses must know how
much money is coming in (revenue) and going out (expenditure),
before they can work out whether the business has:
Ø Made
a profit
Ø Made
a loss
Define:
Ø Profit
revenue is more than expenditure
Ø Loss
expenditure is more than revenue
§ Calculate profit (formula will not be given in the assessment)
Profit = Revenue - Expenditure
