1. COST, Revenue, profit

2. Lesson objectives  Difference between fixed and variable costs.  Difference between direct and indirect costs.  Difference between costs and revenue.

3. 2 mins starter…  List as many costs in bread factory as you can….  Which are Fixed and Variable costs?

4. BREAD FACTORY FIXED COSTS  Rent VARIABLE COSTS  Wages

5. Costs  Fixed Costs (FC) – Do not change with output.  Variable costs (VC) change with output.  Total costs (TC) = FC + VC  Average Cost (AC) = TC/Quantity

6. Direct v Indirect  Direct costs = Variable costs  Indirect costs = Fixed costs

8. Revenue  2 girls sell 18 glasses of lemonade for $10.  How much money do they make?  18 x $10 = $180  Total Revenue (TR) is total sales  TR = Price x Quantity

9. Profit  This is what the entrepreneur gets after all costs have been paid.  Profit is the driving force behind every business and firm in operation.  Profit = TR – TC.

10. Can you figure out equations for  Revenue ____ x____  Profit = ___ - _____  Total cost = ___ + VC  Fc =  VC =  AVERAGE COST = ____

11. Diagrams  FC  VC  TC  TR

12. Lesson objectives  Difference between fixed and variable costs.  Difference between direct and indirect costs.  Difference between costs and revenue.