Operations management

Table of Contents

1. Topic pack - Operations management - introduction
2. Operations Management (OM) - Introduction
3. 5.1 Production methods notes
4. 5.1 Production methods - questions
5. 5.2 Costs and revenues - notes
   1. Costs and revenues
   2. Types of costs
   3. Costs and revenue - shape of cost curves
   4. Costs - fixed and variable - examples
   5. Revenue
   6. Mattel 1Q Profit Falls On Higher Expenses
   7. Costs and decisions
   8. Contribution to fixed costs
   9. Contribution analysis for multi-product firms
   10. Special orders
   11. Cost centres and profit centres
   12. Why have cost and profit centres?
   13. Apportioning costs to profit and cost centres
   14. Full Costing
   15. Absorption costing
6. 5.2 Costs and revenues - questions
7. 5.3 Break-even analysis - notes
8. 5.3 Break-even analysis - questions
9. 5.3 Break-even analysis - simulations and activities
10. 5.4 Quality assurance - notes
11. 5.4 Quality assurance - questions and activities
12. 5.5 Location - notes
13. Innovation - notes (HL only)
14. 5.6 Innovation - questions
15. 5.7 Production planning - notes
16. 5.7 Production planning - questions
17. 5.8 Project management - notes (HL only)
18. 5.8 Project management - questions (HL only)
19. Print View

Costs and revenues

The terms 'revenues' and 'costs' are probably two of the most important concepts in Business and Management. No business can make profit without sales revenues and cost control is vital to a business if it is to maintain and improve profitability.

In simple terms, a business wishing to make a profit must make sufficient revenues to cover its costs because:

Revenue

Revenue is also known as sales, sales revenue or turnover. It should be distinguished from other forms of income that a firm generates from other non-operational activities, such as the sale of assets.

Total revenue can be expressed by the following formula:

A firm's performance will be judged by how much profit it is able to make from a given sales revenue. The higher the proportion of profit, the more efficiently the firm is being run, as by implication the costs of the business must have been minimised to increase profit levels.

Fortune magazine produces annual rankings of the largest 500 global corporations, listing sales and profits.

In the following sections we will examine the nature of revenues and costs in greater detail.