1. COSTS
COSTS are the money that a business has to pay out to keep the business running.
Buying stock
Paying Wages
Telephone bills
Rent

2. Click the boxes – Once for ‘Yes’, twice for ‘No’
TYPES OF COST
Click the boxes – Once for ‘Yes’, twice for ‘No’
Changes with
number made
Rent per month
Wages per month
Bank loan per month
Advertising per month
Insurance per month
Raw material per item made
Check answers No
Yes No
Yes No
Yes
Yes No
Yes No
Yes No No
Yes

3. Click the boxes – Once for ‘Fixed’, twice for ‘Variable’
TYPES OF COST
Click the boxes – Once for ‘Fixed’, twice for ‘Variable’
Fixed / Variable
Rent per month No
Wages per month
Bank loan per month
Advertising per month
Insurance per month
Raw material per item made
Yes
Check answers
Fixed
Variable
Variable
Fixed
Variable
Fixed
Fixed
Variable
Fixed
Variable
Fixed
Variable
Variable
Fixed

4. Does not change with the number being made or sold
A FIXED COST
Does not change with the number being made or sold
This does not mean that fixed costs can never change…
e.g. your landlord may put your rent up
the local council might put up the business rates
the bank may put up the interest on your bank loan

5. Varies with the number being produced or sold
A VARIABLE COST
Varies with the number being produced or sold
Usual example is the raw material cost of what is being made..
e.g. a sandwich bar would have bread, butter, cheese, tuna, mayo, etc as variable costs because the cost of these things will be different depending on the number of sandwiches being sold….the more sandwiches sold the more bread the sandwich bar will have to buy.

6. Toys made each month 1 2 3 4 5 Fixed Cost £ Variable cost £
Jane makes soft toys in her spare time…
…a very small business.
Jane’s Costs:
Bank Loan repayment £50 per month
Materials £5 per toy
Toys made each month 1 2 3 4 5
Fixed Cost £ 50
Variable cost £ 10 15 20 25
Total Cost £ 55 60 65 70 75
Reveal answers

7. Drawing the Cost Lines Total Cost Fixed Cost Variable Cost
Click the boxes to reveal the graph lines
Total Cost
Fixed Cost
Variable Cost
Click to select a marker and drag it to plot the graph

8. Sold £15 Jane’s Sales Jane sells her toys for £15 each
This is known as her PRICE
Reveal answers
Toys sold each month 1 2 3 4 5
Price £ 15
Sales Revenue £ 30 45 60 75

9. Click to select the marker and drag it to plot the graph
Drawing the Cost &
Revenue Lines
Total Revenue
Break even point
Total Cost
Fixed Cost
Variable Cost
Click to select the marker and drag it to plot the graph
Break even output

10. Click here to show profit
Drawing the Cost &
Revenue Lines
Click here to show loss
Click here to show profit
Total Revenue
PROFIT
Total Cost
Fixed Cost
LOSS
Variable Cost
Break even output