2.2.2 Sales Revenue and costs Flashcards
Two main ways to measure Sales :
Sales volume
Sales Revenue
Sales Volume
The number of units sold by a business during a given time period
Sales Revenue
the income earned by a business from the sale of it’s goods and services in a given timer period
- ‘value of sales’
- ‘turnover’
- ‘revenue’
Sales Revenue formula
Selling price X sales volume
Sales volume formula
Sales revenue/Selling price
Fixed Costs
Business costs that are constant whatever the amount of goods produced
- don’t change with output
- e.g rent, salaries, utilities(gas, electricity), Annual interest
Variable costs
Costs that varies with the level of output
e.g raw materials, piece rate labour, stock
Total Variable costs formula
Average variable costs (avc) X quantity produced
Total costs formula
Fixed costs + Variable costs
Profit
When you deduct a businesses total costs from it’s total revenue.
- remaining revenue left once total costs have been deducted
Profit Formula
Total Revenue - total costs
