PPT-5.2.1 COSTS, REVENUE AND PROFIT

IB Business amp Management IB2 Higher Level Objectives By the end of the lesson students should be able to To classify costs as fixed variable semivariable direct indirect To understand the importance of profit quality . Based on the books: . Building Lean Supply Chains with the Theory . of . Constraints . M. anaging . Business Process Flow . Throughput Profit Multiplier (TPM). A large fraction of the operating costs are fixed . Marginals. for linear functions. Break Even points. Supply and Demand Equilibrium. Applications with Linear Functions. Cost, Revenue, Profit, . Marginals. Cost: C(x) = variable costs + fixed costs. Revenue: R(x) = (price)(# sold). A business needs to keep track of all their income - . REVENUE. and EXPENSES.. Any money coming in to a business is recorded as revenue.. Any money going out of a business is known as an expense.. For a business to be profitable their revenue must be greater than their expenses.. Demand for the product of a perfectly competitive firm. P. rice determined . by . S & D. P. rice . taker . Won’t charge higher or lower than market price. H. orizontal (perfectly . elastic) at . How do businesses decide what price to charge and how much to produce?. It depends on the . character of its industry. .. Classroom Concerns. Attendance Issues* 15 Limit. Tardiness. Uniform. Assignment Completion. 1. Revenue recognition. Expense recognition. Revenue recognition by critical event. Revenue recognition by effort expended. The percentage-of-completion method. Long-term contract losses. The instalment method. RyanAir. Melissa Chen, David . Gruen. ,. How-Chin Liu,. John . Masline. RyanAir. Launch Strategy. Revenue Assumptions:. An average of 70% capacity. Runs 365 days in a year. Price is I. ₤. 98 per passenger. AP Economics. Mr. Bordelon. Profit. Profit.. . . T. otal revenue minus total cost. π means “profit.”. π = TR – TC. Total revenue.. Price of output times the quantity sold.. TR = PQ. Total cost.. Marginal Revenue (MR): . Change. in the firm’s total revenue resulting from a . one unit change. in production.. Marginal Cost (MC): . Change. in the firm’s total cost resulting . from . a . one unit change . Sir went to Iceland!. On the way to school this morning I called into Iceland . I bought 10 boxes of Strawberry and Vanilla ice cream cones and 10 boxes of Choc and Nut ice cream cones. Each box cost £1 and has 6 cones in it. ©2011 John M. Abowd and Jennifer P. Wissink, all rights reserved.. What Is A Firm?. Broadly: A firm is an organization producing goods or services, also called a business.. Examples of common businesses: . Taradevi Harakh Chand Kankaria Jain College. Cossipore, Kolkata -700002. Nature of profits:. Profit is a reward of the entrepreneur, rather of the entrepreneurial functions. Profit differs from the return on other factors in 3 important respects:. Behind the Supply Curve. Profit . Profit = Total Revenue – Total Cost. Primary goal of a firm is to maximize profit. Can be done in two ways. Increase revenue. Reduce costs. What types of costs exist?. CHAPTER OBJECTIVES. Meaning of Cost-volume-profit analysis. . Objectives . of Cost-volume-profit . analysis. Assumptions of Cost-volume-profit analysis . T. echniques . or elements of Cost-volume-profit analysis..