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5.2 Costs and revenues - notes

In the previous section we looked at production methods. We will now examine costs and revenues.

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By the end of this section you should be able to:

  • Define, explain and give examples of each different type of cost
  • Explain the meaning of revenue and comment on possible sources of revenue for different firms
  • Explain and calculate the contribution to fixed costs

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  • Explain the nature of cost and profit centres
  • Analyse the value of cost and profit centres to a firm
  • Analyse the role of contribution analysis in determining the viability of each product for a multi-product firm