2. Tutorial:Business Academy Topic: Economic aspect of business activity Prepared by:Ing. Marcela Zlatníková Projekt Anglicky v odborných předmětech, CZ.1.07/1.3.09/04.0002 je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky.

3. Business activity has two aspects – tangible and economic. TANGIBLE ASPECT Business inputs→ Business → Outputs material, raw materials, production products Workforce services Fixed assets ECONOMIC ASPECT Costs→ Business → Profit sales, other income

4.  They represent consumption of factors of production for a particular purpose expressed in monetary units  It is monetary expression of all business inputs  We must distinguish expenditures from costs, not every expense is cost  It is necessary to monitor costs in the company because incurred costs reduce profit

5. 1.BY TYPES - They express structure of the necessary costs of entry into business - They are used in the 5th account class of the accounting plan - They include for example consumed purchases, services, personal costs, depreciations, financial costs 2. FOR PURPOSES OF FINDING OUT ECONOMY RESULTS - Operating costs - Financial costs - Extraordinary costs

6. 3. BY RELIANCE ON CHANGE IN VOLUME OF PRODUCTION - permanent (fixed) – costs do not change with the change in volume of production, they change in a leap after some time, e. g. rent - variable (changing) –costs vary with the change in volume of production. This involves further division: ∙ proportional – total costs vary directly with the change in volume of production, e.g. Consumption of basic material ∙ progressive – total costs are rising faster than volume of production, e.g. increase in production causes pay of bonuses for work ∙ degressive –total costs are rising more slowly than volume of production, e.g. Better use of factors of production, reduction of losses

7. 4. PURPOSE ( CALCULATION ) DIVISION - direct (unit) – it can be determined directly on the calculation unit, such as consumption of basic material - indirect (overhead) – they cannot be determined directly on the calculation unit, we have to divide them, such as energy consumption 5. IN TERMS OF DEVELOPMENT - production – those expended on production of certain product - circulation – those expended on the sale of own products

8.  They are sums expressed in monetary units, that the company received from its activities  Main part of revenues are sales of own outputs and goods  Another part of revenues are financial revenues, such as surplus in cash box in the case of stocktaking and extra revenues  Company revenues are found out when the amount of output is multiplied by its price  We must distinguish revenues from income, not every income is revenue

9. 1. BY TYPES- these are revenues arranged in the 6th account class of the accounting plan, such as revenues from own outputs and goods, change in state of intercompany inventory, activation of assets developed by own activity, other operating revenues 2. FOR PURPOSES OF FINDING OUT ECONOMY RESULTS - operating revenues - financial revenues - extraordinary revenues 3. BY INTERCOMPANY DEPARTMENTS – it is about assignment of revenues to individual intercompany departments, such as production revenues, management revenues, sales revenues

10.  It expresses level of company management in crowns  It is found out by comparing costs and revenues  Result of efficiency is the most important indicator which characterizes company management  It is detected: √ by non-accounting – by use of profit and loss records √ by accounting – with help of profit and loss account Revenues ≻ Costs → Profit Revenues ≺ Costs → Loss Revenues – Costs = Result of management (profit) – Income tax

11. 1/ Consider, whether the following costs belong to operational, financial or extraordinary: a/ interests of loan b/gross wages of employees c/material damages due to flood d/ bank fees e/ material consumption f/ depreciation of DM 2/ Indicate which of the following revenues belong to operational, financial or extraordinary: a/ sales of selling goods b/ credited interests on deposits c/sales for provided services 3/ The company has spent in the past period total costs on its activity 2 560 000,- crowns. 24 000 pieces of goods were sold in the sales price of 137,- crowns per piece. Find out the result of company management.

12.  Biňovec, K. Přehled učiva k maturitní zkoušce z ekonomiky. Fortuna, 2004. ISBN 80- 7168-747-2.  Švarcová Jena, ing a kolektiv, Ekonomie, stručný přehled. Ing. Jena Švarcová, Ph.D., CEED nakladatelství a vydavatelství, 2006. ISBN 80-903433-3-3.  Klínský Petr, Munch Otto, Ekonomika pro obchodní akademie a ostatní střední školy 1- 4. Fortuna, 2003, ISBN 80-7168-862-2.