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Revenue, Costs and Profit Calculations

Money in, money out: does the business come out ahead? Learn to calculate revenue, sort fixed costs from variable, add them into total costs, and work out the profit or loss, all without a formula sheet.

⏱️ 16 min 🎯 13 activities Teachers Not yet rated Students Not yet rated

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What you'll cover

Does it make a profit? 💰

A business survives by making a **profit**: earning more than it spends. To work that out you need its **revenue** (the money coming in) and its **costs** (the money going out). This module shows how to calculate revenue, costs and profit. Remember, you must **memorise** every formula, because the exam does not give them.

The money words 🔑

Four ideas run through the calculations:

Calculate the revenue 🧮

An interactive activity.

Spot the fixed cost 🏠

Which of these is a FIXED cost for a bakery?

  • The monthly rent for the shop
  • The flour used to bake the cakes
  • The icing put on each cake
  • The paper bags used for each sale

Fixed or variable? ⚖️

Costs split into two kinds, and telling them apart is essential for these calculations.

Calculate the profit 🧾

An interactive activity.

Which are fixed costs? ✅

Select the TWO costs that are FIXED costs.

  • The rent for the business premises
  • A manager's fixed annual salary
  • The raw materials used in each product
  • The packaging for each item sold

No formula sheet, so memorise ⚠️

In the exam you are given **no formulae**, so learn them: **revenue = price x quantity**; **total costs = fixed costs + total variable costs**; **profit = revenue - total costs**. If total costs are greater than revenue, the business makes a **loss**. Borrowing money adds **interest**, an extra charge on top of the amount borrowed, which increases the costs the business must cover.

Match each term to its meaning 🔗

  • Revenue
  • Total costs
  • Profit
  • Variable cost
  • Selling price multiplied by the quantity sold
  • Fixed costs added to total variable costs
  • Revenue with total costs taken away
  • A cost that rises as more is produced

Complete the summary 🧩

The money a business earns from sales is its _____, found by multiplying price by quantity. Costs that stay the same whatever the output are _____ costs, while costs that change are _____ costs. When you subtract total costs from revenue you get the _____; if it is negative, the business makes a _____.

revenue fixed variable profit loss interest quantity price break-even surplus

Profit at the bakery 🧁

An interactive activity.

Spot the true statements 🖍️

An interactive activity.

Working out the profit ✍️

An interactive activity.