Revenue, Costs & Profit

Understanding revenue, costs, and profit is fundamental to GCSE Business Studies. This lesson explains how each is calculated, the different types of costs, and how businesses use these figures to make decisions.

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Key Financial Terms

Term	Definition	Formula
Revenue	The total income a business earns from selling its products (also called turnover)	Revenue = Price × Quantity Sold
Fixed costs	Costs that stay the same regardless of how much is produced	e.g. rent, insurance, salaries
Variable costs	Costs that change in proportion to the amount produced	e.g. raw materials, packaging, delivery
Total costs	The sum of all fixed and variable costs	Total Costs = Fixed Costs + Variable Costs
Profit	The money left after all costs have been deducted from revenue	Profit = Revenue − Total Costs
Loss	When total costs exceed revenue	Loss occurs when Revenue < Total Costs
Interest	The cost of borrowing money	Calculated as a percentage of the loan

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Revenue