2.2.2 Sales, Revenue and Costs Flashcards
What is Sales volume?
Sales volume is the amount of sales expressed as a number of units sold
e.g. 20 tonnes of wool
What is Sales revenue?
Sales revenue is the amount of sales expressed as the total sum of money spent by consumers. It is the income earned by a business over a period of time
e.g. one month
What is the calculation for Sales volume?
Sales revenue / selling price
A company has sales revenue of £50 000
Selling price is £2.50
What is the Sales volume?
£50 000/£2.50 = 20 000 units
What is the calculation for Sales revenue?
Selling price x quantity sold
A company sells 20 000 units
Selling price is £2.50
What is the Sales revenue?
£2.50 x 20 000 = £50 000
What is Revenue?
Revenue is the money coming in from the sale of goods and services
What is the equation for Revenue?
Revenue = Selling price x quantity sold
If a business sold 20 000 units at a selling price of £15
What is the Revenue?
£15 x 20 000 units = £300 000
Revenue increases with the____________ sold and therefore starts at _ and slopes _____ when shown on a graph
Amount of units sold
0
Upwards
What are Fixed costs?
Fixed costs stay the same regardless of output e.g. rent and manager’s salaries
What other things are included in Fixed costs?
Fixed costs also include interest on bank loans
A business borrows £30 000
The annual rate of interest is 7.5%
What is the Fixed costs?
£30 000 x 0. 075 = £2250
The business has a fixed interest payment of £2250 per annum
What do Fixed costs look like on a graph?
Fixed costs are shown as a straight horizontal line when shown on a graph
What are Variable costs ?
Variable costs change in relation to the number of items produced e.g. raw materials
What is the calculation for Total variable costs?
AVC x Q =TVC
Average variable costs x Quantity = Total variable costs
What do Variable costs look like on a graph?
Variable costs start at zero and slope upwards when shown on a graph
What are the Total costs?
Total costs are fixed costs plus total variable costs
What’s the calculation for Total costs?
TC = FC + TVC
What do Total costs look like on a graph?
Total costs start at the fixed cost point on the y axis and slope upwards parallel to the variable cost line
Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales volume?
100,000 Units
Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales revenue?
? £1,500,000
Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What are the total variable costs?
£600,000
If the Total variable costs are £600,000 and the Fixed costs are £40,500, what are the total costs?
£640,500
