Production of goods and services
Process of adding value to a product (using four factors of production) to satisfy costumers’ needs and wants
Production
The use of advanced technology to make a production method work automatically without employee control.
Automation
Costs that vary with the level of output. These costs increase as output increases and fall if the level of output decreases
Variable costs
This profit is kept in the business after the owners have taken their share of the profits.
Retained profit
The sums of money paid out by a business during a period of time.
Cash outflow
a production method which focuses on greatly reducing or virtually eliminating the need to hold inventories of raw materials
JIT
introduction of machines into production methods.
Mechanisation
The company employs inspectors to test every finished product or take samples and test them - before reaching the customers.
Quality control
Money spent on non-current (fixed) assets which will last for more than one year.
Capital expenditure
It is the difference between cash inflows and cash outflows during each period of time, usually one month.
Net cash flow
This method is used where a single product is made at a time, usually to a customer’s specific requirement (instruction)
Job production
The use of software and computer-controlled machinery to automate a manufacturing process.
Computer-aided manufacturing (CAM)
setting quality standards throughout the production process and checking these are reached at each stage of the process.
Money spent on day-to-day expenses which do not involve the purchase of a long-term asset, e.g. wages or rent.
Revenue expenditure
These are long-term debts owed by the business, repaid over more than one year
Non-current liabilities
large quantities of an identical product are produced in a continuous process (mass production)
Flow production
The use of IT to help create, modify and improve designs.
Computer-aided design (CAD)
Large businesses are able to use flow production as they experience economies of scale. What type is this?
Technical economies of scale
When a business is allowed to pay a supplier some time (delay paying) after materials have been purchased.
Trade Credit
Wealth / equity was calculated by substracting all that a business owed from the value of all that a businessman owned.
Shareholders' equity
where similar products are made in groups
Batch production
This is used at checkouts in shops when the operator scans the barcode of each item individually.
Electronic Point of Sale (EPOS)
The quantity that must be produced or sold for total revenue to equal total costs.
Break-even output
The amount of investment provided by investors who are prepared to take risks by offering finance to start-up companies or small companies that have good growth potential
Venture Capital
a financial account that records the income of a business and all costs incurred to earn that income over a period of time
Statement of profit or loss / income statement