This lesson will be about... COSTS FOR A NEW BUSINESS (part of financial planning in business plans) How do we find out how much things cost? What methods would a business used to find these?

Quick Quiz (1-6) A mission statement is a corporate believe, and slogan that a business would use do describe its ethos. Can you guess the who mission statements? Can you guess who these belong to?

1. “To Refresh the world”

2.“Doesn’t cost the earth”

3. “To uphold the law fairly and firmly: to prevent crime; to pursue and bring to justice those who break the law; to keep the Queen's peace; to protect, help and reassure the community: and to be seen to do all this with integrity, common sense and sound judgement.”

4. “To experience the emotion of competition, winning and crushing competitors.”

5. “By all lawful means, prevent cruelty, promote kindness to and alleviate suffering of animals”

6. “We work to help people and businesses throughout the world realize their full potential”

How did we do?

1. “To Refresh the world” – Coca Cola

2.“Doesn’t cost the earth” – Body Shop

3. “To uphold the law fairly and firmly: to prevent crime; to pursue and bring to justice those who break the law; to keep the Queen's peace; to protect, help and reassure the community: and to be seen to do all this with integrity, common sense and sound judgement.” – West Yorkshire Police

4. “To experience the emotion of competition, winning and crushing competitors.” - Nike

5. “By all lawful means, prevent cruelty, promote kindness to and alleviate suffering of animals” – RSPCA

6. “We work to help people and businesses throughout the world realize their full potential” – Microsoft

NO IDEA I NEED HELP NEVER HEARD OF IT OK I CAN DO THIS WITH SUPPORT SOME GUIDANCE NEEDED NEARLY AT MY TARGET GOT IT! VERY CONFIDENT WILL HIT MY TARGET GRADE EXCEED TARGET Success Criteria < CClassify costs into fixed and variable costs Define fixed and variable costs C >Justify your choice of classification Complete the estimated costs sheet using a range of resources B >Complete the what if scenarios (additional calculations that expand knowledge) Suggest ways in which profits could be increased using theory knowledge covered in 1.3 A >QOWC and SPAG LEARNING OBJECTIVES Explore the different types of costs a business has. (fixed and variable)

Key Terms Fixed Costs – A cost that remains the same, and does not vary according to business output. E.g. Rent. This is paid whether products are being made or not e.g. rent Variable Costs – A cost that is directly linked with business output. They are expenses that change in proportion to the businesses activity. For example; The more dining tables I make, the more wood I’ll need.

Classify Costs Repayments on a loan Wages of permanent staff Phone line rental Advertising Insurance Fuel Wages of casual staff Raw Materials VAT Extension – Think of some additional fixed and variable costs

TASK Costs work sheet

Plenary [10 minutes] Think about theory we have learnt… link to objectives from previous lesson. Non –profit business will want to cover costs (breakeven/survive) Additional funds will be reinvested into business. What will private businesses want to do? (make excess amounts of profits/surplus) Reduce costs to maximize profit, These can be used for growth, expansion, diversification and advertising. The more profits made the better. Other discussion points can include… what do we do if we are making a loss?