5.3 What are the costs of production?

Quick review
We still need the theory we learned in the previous sections.
Just a couple questions to see if we remember it...
1 / 26
volgende
Slide 1: Tekstslide
EconomieMiddelbare schoolhavoLeerjaar 3

In deze les zitten 26 slides, met interactieve quizzen en tekstslides.

Onderdelen in deze les

Quick review
We still need the theory we learned in the previous sections.
Just a couple questions to see if we remember it...

Slide 1 - Tekstslide

What are the different forms of business organisations?

Slide 2 - Open vraag

The owner's equity of a corporation and a LLC consists of...

Slide 3 - Open vraag

What is a balance sheet?

Slide 4 - Open vraag

An example of a fixed asset is...
A
Stock of goods
B
Bank account
C
Building
D
Owner's equity

Slide 5 - Quizvraag

An example of a long-term debt is...
A
debtors
B
creditors
C
bank account
D
mortgage loan

Slide 6 - Quizvraag

5.3 What are the costs of production?

Slide 7 - Tekstslide

Costs
In order to keep going with your company, you have to earn enough money to pay for all the costs

  • Costs of goods sold - the amount paid for the products that have been sold
  • Operating costs - the sum of all other costs

Slide 8 - Tekstslide

Emily bought 70 shirts to sell in her new clothing shop.
A
Costs of goods sold
B
Operating costs

Slide 9 - Quizvraag

Justin paid the bill from the landlord, the rent of his shop was € 1200 this month
A
Costs of goods sold
B
Operating costs

Slide 10 - Quizvraag

Operating costs
Operating costs can be divided in two categories:
  • Fixed costs - these costs are independent of output
  • Variable costs - are dependent on output

Total costs (TC) =  average variable costs (AVC) x number of products sold (q) + total fixed costs (TFC)
TC = AVC x q + TFC

Slide 11 - Tekstslide

Fire insurance premiums are...
A
Fixed costs
B
Variable costs

Slide 12 - Quizvraag

Packaging material costs are...
A
Fixed costs
B
Variable costs

Slide 13 - Quizvraag

A company's total costs is € 250,000 when they sell 10,000 products. Variable costs are € 7.50 apiece. Calculate the fixed costs of this company.

Slide 14 - Open vraag

A company's total fixed costs are €175,000. The variable costs per product are €7.50. Calculate the total costs at a production of 20,000 products.

Slide 15 - Open vraag

Different types of operating costs
  • Cost of labour -  the sum of all wages paid by an employer
  • Housing costs - the sum of all costs related to the building
  • Selling/distribution expenses - the costs related to sales and distribution

Slide 16 - Tekstslide

Robert gives the bank the assignment to transfer money to all employees on the 25th of each month
A
Housing costs
B
Selling/distribution costs
C
Costs of labour

Slide 17 - Quizvraag

Nellie pays the landlord €500 to fix a broken panel in her shop
A
Housing costs
B
Selling/distribution costs
C
Costs of labour

Slide 18 - Quizvraag

John wants an advertisment in the newspaper, it will cost him €75.
A
Housing costs
B
Selling/distribution costs
C
Costs of labour

Slide 19 - Quizvraag

Costs of interest
  • Costs of interest - the amount  of interest paid on loans
  • Redemption - repaying your loan

Amount of interest per year = percentage of interest x  outstanding loan

Slide 20 - Tekstslide

John secured a loan of €300,000 for his enterprise. He has to pay 4.5% interest a year on the outstanding loan. He has to redeem the loan in 30 equal instalments. Calculate the amount of interest John has to pay in the first year.

Slide 21 - Open vraag

John secured a loan of €300,000 for his enterprise. He has to pay 4.5% interest a year on the outstanding loan. He has to redeem the loan in 30 equal instalments. How much interest does John has to pay at the end of the third year?

Slide 22 - Open vraag

Depreciation costs
  • Depreciation costs -  the costs of a decrease in asset value
For example: a car will lose value due to use, after a couple years it will need to be replaced

Yearly depreciation costs = (purchase value - salvage value) / estimated life

Slide 23 - Tekstslide

A machine with a total purchase value of €200,000 has a salvage value, after six years, of €20,000. Calculate the yearly depreciation.

Slide 24 - Open vraag

Frank buys a new car for € 15,000. After five years, he sells the car for 40% of the original purchase value. The depreciation charges per annum will therefore be:
A
1,200
B
1,800
C
2,000
D
9,000

Slide 25 - Quizvraag

Homework
Finish the questions of section 5.3
(Q 28 - 44)

Slide 26 - Tekstslide