Transcript Gorgeous Gateaux - Brighouse High School

Max’s
Cartoon
Cakes
Objectives
• To understand the different types of
costs that a business might have
• To understand how a firm calculates its
sales revenue
• To understand how profit is calculated
• To understand the link between supply
and demand in the cake market
The aim of the game is …
… to make more profit
than the other firms
competing in the same
market
Fixed Costs
Costs that do not vary with
output eg rent, insurance
Fixed costs per month for Max:
£4,000
Variable Costs
Costs that do vary with output eg
flour, eggs, sugar (raw materials)
Variable costs for one crate of cakes
produced:
£1,000
Fixed
Variable
+
Costs
Costs
=
Total Costs
Sales Revenue
The money received from
customers when they pay for
goods.
Price x Number of goods sold:
£3
x 10
=
£30
Profit
Sales
Revenue
-
Total =
Costs
Profit
(or loss)
£500
-
£200 =
£300
Decisions each
month:
• How many crates of cakes
shall we produce? (Output)
• How much shall we
charge for each crate? (Price)
Price you should charge:
Between £2,000 and £10,000 per crate
of models
Number of crates you should make:
Between 2 and 10 crates
What I will buy:
Cheapest price
8 crates
Next cheapest
6 crates
Next cheapest
4 crates
Most expensive
2 crates
Is it a good idea to charge
a high price and produce 8
crates of models?
True or False?
A fixed cost is a
cost that does not
vary with output
True
True or False?
The money received
from customers when
they pay for goods is
called sales revenue.
True
True or False?
An example of a variable
cost is rent.
False
True or False?
Sales revenue is a
business cost.
False
True or False?
An example of a
variable cost in Max’s
business is flour (a
raw material).
True
True or False?
If you charge a low
price, a customer will
always buy your
product.
False
True or False?
When the price of a
good is increased,
demand will usually
decrease.
True
True or False?
When the price of a
good is increased,
demand will always
decrease.
False
True or False?
If demand for a
product decreases, a
firm will probably
reduce output.
True