2.2.2 - Sales, Revenue and Costs Flashcards
What is sales volume?
Sales volume is the number of units sold in a given time period.
What is sales revenue?
Sales revenue is the value of sales in a given time period, sometimes called sales, revenue, or turnover. It is the amount of money generated by sales before any deductions.
How is sales revenue calculated?
Sales revenue = selling price × sales volume.
How can you calculate sales volume?
Sales volume = sales revenue ÷ selling price.
What are fixed costs?
Fixed costs are costs that do not change with output, such as rent, business rates, salaries, and machinery costs.
Give an example of a fixed cost.
Annual interest on a bank loan is a fixed cost. For example, if the loan is £5,000 and the interest rate is 15%, the annual interest would be £750.
What are variable costs?
Variable costs are costs that change with output, such as raw material costs, packaging, and hourly wages.
How do you calculate total variable costs?
Total variable costs = average variable cost × quantity produced.
What are total costs?
Total costs = fixed costs + variable costs.
What is profit?
Profit is the difference between revenue and costs. Profit = total revenue - total costs.
What happens if total revenue is greater than total costs?
The business will make a profit.
What happens if total costs are greater than total revenue?
The business will make a loss.
