Different Types of Costs
Storyboard Text
- So I hear you want to open up your own ice cream shop. I'm here to help you understand key terms and the types of different costs.
- Ice Cream
- Alright, what's first then?
- Fixed Costs and Variable Costs.
- Fixed costs are costs that never change regardless of the output. However, variable costs vary with the level of output.
- Oh! So a fixed cost would be rent and a variable would be the ice cream cones.
- Total Cost
- Total cost is the variable costs and the fixed costs added together. It can be used to calculate profit or loss.
- Exactly.
- So total cost is how much I'm spending all together?
- Revenue
- Revenue is the amount of capital generation through sales. Essentially, it's how much money is made from selling your ice cream.
- No. Revenue doesn't take your spending into account.
- Would my revenue be affected by my total costs?:
- Profit and Loss
- Profit and Loss are very important. They are how much money your business will make when covering the total costs too.
- Profit means you make more money than you spend, while loss means you make less money than you spend. It is calculated by: revenue - total costs
- So what's the difference? And how do I calculate them?
- Ice Cream
- Thank you so much. I understand the importance of these key terms, and now I feel more ready than ever to start my business
Over 30 Million Storyboards Created
No Downloads, No Credit Card, and No Login Needed to Try!
