Learning objective
Distinguish variable costs, fixed costs and total costs.
Read the explanation, check the common trap, then practise with flashcards and questions.
At a glance
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Flashcards
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Questions
Topic
Business planning
Subtopic
Basic financial terms
Study support
Understand this objective
Quick explanation
Distinguish variable costs, fixed costs and total costs
- This point belongs to Business planning, especially Basic financial terms.
- You need to be able to distinguish variable costs, fixed costs and total costs.
- The key ideas to know are variable costs, total costs, and fixed costs.
- Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.
Key concepts
Why it matters
This objective helps connect Basic financial terms to exam-style questions, flashcards, and revision notes for Business planning.
Quick student answer
A retailer has fixed costs of £1,200 per month and variable costs of £3 per item sold. If they sell 400 items in a month, calculate the total cost for that month.
Direct answer
£2,400
How it works
Variable cost = £3 × 400 = £1,200. Total cost = fixed cost (£1,200) + variable cost (£1,200) = £2,400.
Key terms
- Total cost: The sum of all fixed and variable costs incurred in producing a given level of output.
Common trap
Confusing fixed and variable costs: Fixed costs remain constant in the short run regardless of how many units are produced; only variable costs change with output.
Related questions
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Flashcard prompts
Flip through the key recall cards
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Revision tools
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Flashcards0 linked cards
Practice Questions0 linked questions
Revision notestopic notes
Open the full topic revision notes when you are ready to review this objective in context.
Open revision notesRelated learning objectives
- Explain why businesses create plans, including setting up a new business, raising finance, setting objectives and organising business functions.
Purpose and sections of business planning
- Identify the main sections of a business plan.
Purpose and sections of business planning
- Analyse the benefits and drawbacks of business planning.
Purpose and sections of business planning
- Explain revenue, costs, profit and loss in a business planning context.
Basic financial terms