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Learn: Total Costs
AQA GCSE Business 8132
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Welcome!I've reviewed your growth areas and created this lesson to help strengthen your understanding of Total Costs. Let's dive in and build your confidence!
What are Total Costs?Total Costs are the sum of all costs incurred by a business to produce goods or services. They include both fixed costs (expenses that don’t change, like rent) and variable costs (expenses that vary with output, like raw materials).
Why do Total Costs matter?Total Costs help businesses understand their overall spending and calculate their profit. If costs are too high, profit may decrease, so managing costs is vital for success.
Quick check: Which of the following is a fixed cost?
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How are Total Costs calculated?Total Costs are calculated using the formula: Total Costs = Fixed Costs + Variable Costs. This helps businesses see the complete picture of their expenses.
The formula for total costs is: {{blank0}} Costs + {{blank1}} Costs.
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Examples of Fixed and Variable CostsFixed Costs: Rent, business rates, salaries.Variable Costs: Raw materials, packaging, delivery costs.
Match the items on the left with their correct pairs on the right
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Review Time!Great work! You've learned about Total Costs, including how they are calculated and examples of fixed and variable costs. Now let's test and review your understanding.
Which of the following are variable costs? (Select all that apply)
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Match the items on the left with their correct pairs on the right
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What happens to Total Costs if output increases?
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Final ThoughtsUnderstanding and managing Total Costs is crucial for business success. It helps in budgeting, pricing, and maximising profits. Let’s keep practising to master this concept!
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