- •Unit 1 Why start a business?
- •Vocabulary
- •Why start a business?
- •What is planning?
- •2) What information do you think a business plan must represent? Reading
- •Contents of a business plan
- •What should be in the plan?
- •Business plan
- •Vocabulary
- •Text 4 Starting a new business
- •Vocabulary
- •Financial activities and their management
- •Vice – President for Finance
- •Vocabulary
- •Specify the subject of the piece of writing:
- •Point out the purpose of the piece of writing:
- •Present the main points of the piece of writing:
- •Give your opinion of the piece of writing:
- •Vocabulary
- •Forms of business in the United Kingdom.
- •Sole trader
- •The public sector of the economy.
- •Vocabulary
- •Can you answer the following questions?
- •Introduction to accounting
- •Vocabulary
- •Assets and liabilities
- •Current Fixed assets
- •Vehicles
- •Investments
- •Balance sheet
- •Financial statements
- •Value added statement
- •Vocabulary
- •Valuation of assets
- •Vocabulary
- •Valuation of stock
- •Vocabulary
- •Variable costs
- •Indirect costs
- •Imputed costs
- •Costing and decision making
- •Vocabulary
- •Costing methods
- •Vocabulary
- •The use of funds
- •Vocabulary
- •Sources of finance
- •Borrowing
- •Other sources of funds
- •Management of working capital
- •Vocabulary
- •Money and its functions
- •Nebraska
- •Florida
- •Vocabulary
- •Banks and banking
- •Bank credit
- •Why are companies referred to as ltd., inc., gmbh, or s.A.?
- •The strategy of a company
- •Financial forecasting
- •Careers in finance
- •What is accounting?
- •Financial accounting
- •Business documents
- •Main streets store, inc
- •Main street store, inc Statement of Cash Flows For the Year Ended August 31, 20 XX
- •The ассоunt
- •Title of account Debit | Credit
- •Types of account
- •Classical economics
- •Keynesian economics (Part I)
- •Keynesian economics (Part II)
- •The importance of the rate of monetary growth
- •The basic propositions of monetarism (Part I)
- •The basic propositions of monetarism (Part II)
- •The monetary rule
- •The decline of monetarism
- •Supply-side economics (Part I)
- •(Part II) The Saving and Investment Effect
- •Supply - side economics (Part III) The Elimination of Productive Market Exchanges
- •Rational expectations theory
- •Government finance
- •Government Growth: Purchases and Transfers
- •Tax rates
- •Taxation
- •Types of taxes
- •Sources of federal revenue
- •Sources of State and Local Revenue
- •Tapescripts
- •Glossary
- •Indirect costs
- •Investment
Vocabulary
Do you know the meaning of the following words? Try to match up each of them to its Ukrainian equivalent. Use your dictionary if necessary.
|
|
|
|
|
|
Pre-reading task
Work in small groups.
You are going to read about costs. Do you have any idea about fixed and variable costs?
Do you know anything about them?
Preface each answer with one of the following according to what is true for you:
As for this problem… I am afraid that I don’t know…
It may be assumed that… I am not quite sure that…
It is essential for…
Reading
Read text 16. How much of the information did your group already know?
Text 16
Costs
Costs are incurred by all the activities a business undertakes. Every decision, no matter how small, involves a corresponding cost. The importance which should be attached to cost in any business enterprise cannot be surprising when it is remembered that:
Profit = Revenue - Costs
Some basic cost definitions are given in this text.
Fixed costs
Fixed costs are those costs which, over a given period of time, tend to be unaffected by changes in output. For example, a factory capable of producing 100000 engineering parts in a certain period of time might have fixed costs in terms of rent, heating, lighting and the cost of machinery of £100 000 in that time. If the factory only produces 80 000 units it will still have to meet the costs associated with 100 000 units.
The total number of goods and services a business is capable of producing is known as its capacity. You should realise that businesses offering services will also have a limit to the total amount they can provide for their customers. A hairdressing salon has a given number of seats, sinks, dryers and stylists. A restaurant is limited in the number of meals it can supply by its kitchen capacity, by seating accommodation, the number of staff, and on the number of meals they can serve. The TV engineer is limited by level of skill and the time spent on the number of repairs possible in one day.
When a business produces less than the amount of which it is capable we say it is operating at less than full capacity. This is usually expressed as a percentage of full capacity:
(Number of units produced x 100) / Capacity of business
In the example given above this would be:
(80000 x 100) / 100000 = 80 per cent
Figure 1 Fixed costs Figure 2 Avarege fixed costs declining as output increases
Costs Costs
3 00 5
200 3
Fixed cost
1 00 1 Average fixed costs
0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100
Output Output
Figure1 shows the position of a business with a capacity of 100 000 at a fixed cost of £100 000 in a given period of time.
Average fixed cost is the proportion of total fixed costs carried by each item produced and is calculated by dividing total fixed cost by output. When the business described above is producing at full capacity then the average fixed cost will be £1. When it is operating at 80 per cent capacity the average fixed cost will be £1.20.
Try the same calculation for different levels of output for the above business. You should find that the lower the level of output the higher the average fixed cost. This fact has a significance for businesses when setting prices and deciding whether or not to accept a particular order. Figure 2 shows average fixed costs decreasing as output increases.