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3.2 Costs and revenues
Chapter 3.2 for IB business and management
10
Business
12th Grade
10/21/2015

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Term
Direct costs
Definition
Costs that can be clearly identified with each unit of production and can be allocated to a cost center
Term
Indirect costs
Definition
Costs which cannot be identified with a unit of production or allocated accurately to a cost center
Also known as overhead costs
Term
Fixed costs
Definition
Costs that do not vary depending on the level of output
Term
Variable costs
Definition
Costs that vary depending on the level of output
Term
Semi-variable costs
Definition
Costs that have both a fixed and a variable cost element
Term
Revenue
Definition
The income received from the sale of a product
Term
Total revenue
Definition
Quantity times price
Term
Revenue stream
Definition
The income that an organization gets from a particular activity
Term
What are the benefits of having more than one revenue stream? (2)
Definition
-Higher total revenue
-A form of diversification; if one revenue stream isn't doing so well, the others can make up for it
Term
What are the drawbacks of having more than one revenue stream? (3)
Definition
-More work; each activity needs to be managed and controlled (significant drawback for a sole trader)
-Loss of focus
-Profit centers will need to be established so that the financial info of each revenue stream can be tracked
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