2.2 Defintions Flashcards
Consumer trends
Are the changes in the buying habits of consumers that will influence business decisions
Sales Volume
Sales Volume is the amount of sales expressed as a number of units sold
Sales volume = sales revenue/ selling price
Sales revenue
Sales revenue is the amount of sales expressed as the total sum of money spent by consumers
Sales revenue= Selling price x quantity
Fixed costs
Fixed costs stay the same regardless of output eg; rent and managers salaries
Variable costs
Variable costs change in relation to the number of items produced eg; raw materials
Average variable costs
Sales volume = Sales revenue / selling price
Total Variable costs
Total variable costs = variable costs X quantity
Total costs
Total costs = fixed costs + total variable costs
Total revenue
The total amount of money coming into a business from the sales of a good or service
Contribution per unit
The amount of money each unit sold contributes towards fixed costs and once break even has been achieved then contributes towards profit
Cpu= Sp x VCpu
Break-even point
The level of output at which the business is making neither a profit nor a loss, the point at which the total costs = total revenue (Total costs =Total Revenue)
Break even = fixed costs / contribution per unit
Margin Of safety
The difference between the actual number of units produced and the number of units required to and break even
Margin of safety= actual output - total output
Break-even charts
A visual representation of total costs and total revenue identifying the point at which break-even is achieved ie: when the Total costs line and the Total revenue line,cross
Break-even analysis
A numerical technique used by business to identifying the number of units necessary to achieve an equilibrium here total costs equals total revenues
Sales forecasts
Is the rocks of predicting future sales volumes and values using a range of strategies for example: extrapolation of trends and test markets
