2.4 Fixed and Variable Expenses
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Profit
The positive difference obtained when expenses are subtracted from revenue.
Expense Equation
The sum of the fixed and variable expenses.
Revenue
The income a business receives from selling a product.
Loss
The negative difference obtained when expenses are subtracted from the revenue.
Variable expenses
Expenses that depend on the number of items produced; such as jeans and paint.
Fixed Expenses
Expenses that do not change based on the quantity produced, such as furniture or computer.
Revenue Equation
R = pq where R represents revenue, p represents the price, and q represents the quantity of products sold.
Breakeven point
When the expenses and the revenue are equal, so that there is no profit or loss.
