GCSE Business Studies Revision: Revenue, Costs, and Profit Calculations (With Mock Questions!)

Hello, awesome students! 👋

Let’s jump into a key topic for your GCSE Business Studies exam: Revenue, Costs, and Profit Calculations. Understanding how these three fit together is essential for determining how well a business is performing financially. Don't worry, I’m here to make this topic as simple as possible and get you fully prepared for your exam! 😊💡

What Are Revenue, Costs, and Profit? 🤔

Revenue is the total income a business earns from selling its products or services. You can think of it as the money coming in from customers.

Costs are all the expenses a business incurs to keep running, including wages, rent, materials, and utilities.

Profit is what’s left after all the costs have been subtracted from the revenue. If a business earns more than it spends, it makes a profit. If the costs are higher than the revenue, the business faces a loss.

Key Learning Items 📚

Here’s what you need to focus on:

✅ Revenue Formula - The basic formula for calculating revenue is: Revenue = Price × Quantity Sold

✅ Fixed and Variable Costs - Fixed costs remain constant regardless of the level of production (e.g., rent), while variable costs change with the amount produced (e.g., raw materials).

✅ Total Costs - This includes both fixed and variable costs. The formula is: Total Costs = Fixed Costs + Variable Costs

✅ Profit Formula - The formula for calculating profit is: Profit = Revenue - Total Costs

✅ Gross Profit vs. Net Profit - Gross profit looks at revenue minus direct costs (cost of goods sold), while net profit subtracts all expenses, including overheads, from the revenue.

What You Need to Demonstrate 📝

In your exam, make sure you can:

✍️ Define and calculate revenue, costs, and profit using the formulas.
✍️ Explain the difference between fixed and variable costs, and how these impact total costs.
✍️ Calculate both gross profit and net profit and explain the difference between the two.
✍️ Understand how profit affects business decisions and why it’s crucial for business survival and growth.

Key Things to Remember Before the Exam! 🧠

🔑 Use the Formulas - Make sure you know how to calculate revenue, total costs, and profit using the correct formulas.
🔑 Fixed vs. Variable Costs - Be clear on how these costs differ and why they matter to a business.
🔑 Profit is Essential - Remember, a business needs profit to survive, grow, and reinvest in itself.
🔑 Stay Calm - Take your time with calculations and double-check your work. You’ve got this! 💪

Mock Questions for You! 🎯

Q1 - Which of the following is found in eukaryotic cells but not in prokaryotic cells?

a) Ribosome
b) Nucleus
c) Cell membrane
d) DNA

Q2 - How is revenue calculated?

a) Price × Quantity Sold
b) Fixed Costs + Variable Costs
c) Profit - Costs
d) Sales - Expenses

Q3 - What is the main difference between fixed and variable costs?

a) Fixed costs change with the level of production, while variable costs remain constant
b) Fixed costs stay the same regardless of output, while variable costs increase or decrease with production
c) Fixed costs are only relevant for large businesses
d) Variable costs are always higher than fixed costs

Q4 - If a business has revenue of £10,000 and total costs of £8,000, what is the profit?

a) £2,000
b) £18,000
c) £8,000
d) £10,000

Q5 - What is gross profit?

a) Total revenue minus total costs
b) Revenue minus all expenses
c) Revenue minus direct costs (cost of goods sold)
d) Revenue minus variable costs only

See more questions in our full Q&A Business Studies Booklet

You’re doing an amazing job! Keep practicing, stay focused, and soon you’ll be a pro at calculating revenue, costs, and profit. Keep revising, and remember—every calculation you master brings you closer to exam success! 🌟📚 Good luck, you’ve got this! 🙌