‘Bright- Sparks’ like most businesses have to have a start-up and running costs.
Cost is were there are two types of costs, start-up and operating. A start-up cost is money which a business has to pay only once for example in ‘Bright Sparks’ these would be machinery, office equipment and safety equipment. Operating costs have to be paid monthly or the business will get shut down. ‘Bright Sparks’ has many operating costs, for example,
- Paying employees wages - Utility bills (heating and lighting) - Advertising - Rent - Buying raw materials - Insurance - Company van - Fuel and maintenance for the van
These costs can be either fixed or variable. A fixed cost always must be paid, even if the business has not made any profit or producing products. An example of a fixed cost in ‘Bright Sparks’ would be rent. Variable costs can vary from month to month, based on the amount of materials used in the business- in ‘Bright Sparks’ this could be the materials to make the boxes.
Revenue is the money a business receives from selling its goods or services. ‘Bright Sparks’ make their revenue from selling the fireworks. An example of revenue for ‘Bright Sparks’: • Total revenue for starter boxes- £20.00 x number of boxes sold • Total revenue for ‘ultimate box’- £100.00 x number of boxes sold
Profit is the money left over after the costs have been taken away from the revenue. • Profit = Total revenue – total