Commerce And Production: Production: Costs Involved In Trade, Commerce And Production (Copy)
Cheat Sheet: 1.2.6 Costs in Trade, Commerce and Production
| Cost Type | Meaning | Example |
|---|---|---|
| Advertising | Expense of promoting goods/services | TV commercials, online ads |
| Bank Charges | Fees for financial transactions | Charges for overdraft, account maintenance |
| Commission | Payment to agents for services/sales | Real estate agent commission on property sold |
| Customs Duties | Taxes on imports/exports | Duty paid on imported cars |
| Inventory (Stock Costs) | Money tied up in unsold goods | Cost of storing clothes in a warehouse |
| Labour | Wages and salaries for workers | Factory workers’ salaries |
| Packaging | Cost of protecting and presenting goods | Cardboard boxes, labels, bottles |
| Transport | Moving goods from producers to markets | Fuel costs, shipping charges |
| Utilities | Essential services for production | Electricity, gas, water bills |
| Warehousing | Storage of goods before sale | Renting cold storage for fruits |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
Simple Cost Calculations
| Formula | Example |
|---|---|
| Total Cost = Sum of all expenses | Advertising $200 + Labour $800 + Transport $100 = $1,100 |
| Net Cost after Commission = Selling Price – Commission | Product sold at $500, agent gets $50 → Net = $450 |
| Landed Cost = Purchase Price + Customs Duty + Transport | Importing phone: $300 + $50 duty + $20 transport = $370 |
| Utility Cost per Unit = Total Utilities ÷ Units Produced | $1,000 ÷ 500 units = $2 per unit |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Impact of Costs | On Business |
|---|---|
| High Costs | Reduce profit margins |
| Efficient Cost Control | Increases competitiveness |
| Examples | Reducing packaging saves money; using digital ads lowers advertising cost |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Summary | Key Idea |
|---|---|
| Types of Costs | Advertising, bank charges, commission, customs duties, inventory, labour, packaging, transport, utilities, warehousing |
| Calculation | Businesses must add these to determine profitability and selling price |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course