Profit and Revenue
What is revenue?
The money a business earns from sales
What is a fixed cost?
A cost that stays the same regardless of sales (e.g. rent)
What is profit margin?
The percentage of profit made from revenue
What is net pay?
The money a worker takes home after tax
What is superannuation?
Money saved for retirement
What is profit?
The money left after expenses are taken from revenue
Give one example of a variable cost.
Ingredients, stock, or materials used to make a product.
What is the formula for profit margin?
(Profit ÷ Revenue) × 100
What is the tax-free threshold?
The first $18,000 earned that is not taxed.
Identify one indirect cost.
Electricity, rent, or insurance
Revenue = $800
Expenses = $425.
What is profit?
$375
What is the difference between fixed and variable costs?
Fixed costs stay the same, while variable costs change depending on production or sales
Revenue = $1000
Profit = $200.
What is the profit margin?
20%
Why do some people receive a tax refund?
Because they paid too much tax during the year
What is risk in investing?
The chance of losing money
Explain why a business can have high revenue but low profit.
Because expenses may also be high, reducing the amount of money left as profit
Explain why high variable costs can reduce profit.
Because the business spends more money producing goods, leaving less profit
Explain what a 25% profit margin means.
The business makes 25 cents profit for every $1 of revenue
Explain the difference between gross pay and net pay.
Gross pay is total earnings before tax, while net pay is what is received after tax
What is the 'break-even' point for a business?
The break-even point is when revenue equals expenses, meaning the business makes no profit or loss.
A business increases revenue but profit stays the same. What might have happened?
Expenses likely increased at the same time, cancelling out the extra revenue
A business reduces fixed costs. How could this improve profit?
Lower expenses mean more money is kept as profit
Two businesses have the same profit. One has a higher profit margin. Which is more efficient and why?
The one with the higher profit margin, because it keeps more profit from each dollar earned
A worker earns $500. They pay $80 tax. What is their net pay?
Net pay is $420. This is how much they actually have to spend!
What is the second tax bracket in Australia?
$18,001 – $45,000 → 19%