Specification Topic: Business revenues, costs and profits - Answers

Q1 Fill in the gaps

costs; revenue; spends; fixed; variable; total; profit; greater; loss; interest; borrowed

Q2 True or false? Identify if the following statements are true or false

2.1 False; 2.2 False; 2.3 True; 2.4 True; 2.5 True; 2.6 True

Q3 State the formula! Write down the formula in words for each of the following

3.1 Total costs (TC) = TFC (total fixed costs) + TVC (total variable costs)

3.2 Revenue = price x quantity

3.3 Profit = total revenue – total costs

3.4 Interest (on loans) in % = total repayment – borrowed amount x 100

borrowed amount

Q4 Calculation time! Using the information provided in the table, calculate…

Number of units sold per year 32,000

Fixed costs per year £25,000

Variable cost per unit £1.50

Average selling price per unit £4.00

4.1 the yearly total costs for the business (show your workings)
TC (total cost) = TFC (total fixed costs) + TVC (total variable costs)
TVC (total variable costs) = variable cost per unit x output
TFC = £25,000 per year
TVC = £1.50 x 32,000 = £48,000 per year
TC = £25,000 + £48,000 = £73,000 per year

4.2 the yearly profit for the business (show your workings)
Profit = (revenue) – (total cost)
Revenue = price x quantity = £4.00 x 32,000 = £128,000 p.a.
Profit = £128,000 - £73,000 = £55,000 per year

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Specification Topic: Business revenues, costs and profits - Answers

Q5 Which one?

Total repayment = 60 x £89.50

= £5,370
Interest (on loans) in % = total repayment – borrowed amount x 100
borrowed amount
= £5,370 - £5,000 x 100
£5,000
= £370 x 100
£5,000
= 7.4%

5.1 Interest (on loans) in % = b) 7.4%

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