IBDP Business Management Account And Finance Chapter 2 Notes

costs and revenues

STUDY NOTES FOR BUSINESS MANAGEMENT – OPERATION MANAGEMENT CHAPTER 2 – COSTS AND REVENUES

These notes have specially been curated by expert teachers to simplify and enlighten concepts given in IB Business Management HL. The notes are comprehensive in nature and are sufficient to study the chapter in depth, One need not look for other resources beyond the notes provided on our website which can be accessed for free.

Business management IBDP is a part of group 3 Individuals and the Society of the IB curriculum. The IBDP Business Management course has been devised for imparting knowledge and understanding of different theories of Business Management and application of various tools and methods. It enables the students to analyze and evaluate business activities at all levels- local, national, or international, It also helps in developing holistic understanding of the business environment today which is complex and fast changing.

The subject covers important characteristic of business organization and business functions of human resource management, finance and accounting, marketing, and operations management. The purpose of the course is to help students develop skills that enable them to think critically and make the right decisions after carefully evaluating and analyzing the issue at hand. It also aims at developing the understanding of the importance of innovation and exploring business from different cultural perspectives.

The chapter on Costs and Revenues begins with the explanation of what cost of production means. It is the total sum spent by the organization to produce an output which incorporates the cost of setting up like down payments, legal fees, etc as well as the costs involved in running the businesses like rents, maintenance costs, wages, etc. The chapter further explains the different kinds of costs like Fixed Costs which is to be paid irrespective of the production like rent, salaries of workers, and lease payments. Variable costs keep changing with the change in output. Raw materials purchased would be an example.


Semi-variable costs are a combination of both fixed and variable costs, like the electricity bill. Direct costs are related directly to the production of output which can be both a good and a service e.g., direct labour. Indirect costs also known as overheads are not due to any one output. E.g., legal expenses. Next, we have Revenue which is the income generated by the business which is either through sale of the product or by other means like advertising, donations, subscription fees, etc.