Task 5 budgets
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Variable costs rise and fall with production output, unlike fixed costs such as rent which remain constant. Fixed costs and variable costs together make up total costs. The break even point is where gains equal losses, such as the stock price needed for call option buyers to break even. Monitoring ensures money is spent as intended and not elsewhere.
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Task 5 budgets
- 1. Budgets Variable cost A corporate expense that varies with production output. They rise as production increases and fall as production decreases. Variable costs differ from fixed costs such as rent, advertising, insurance and office supplies, which remain the same regardless of production output. Fixed costs and variable costs comprise total cost. Fixed cost A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of a good or service, along with variable cost. Break even point The point at which gains equal losses. The market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid. Monitoring Monitoring is where you make sure that the money is going on what it is supposed to go on not anything else.