2.2.2 sales, revenue and costs Flashcards
define sales volume
the total number of goods/services that are sold by a business
define sales revenue
the total amount of money earned from the sale of goods/services
what is the calculation for sales volume?
sales revenue
___________
selling price
what is the calculation for sales revenue?
selling price x quantity sold
define revenue
revenue is the money coming in from the sale of goods/services
how does revenue look like on a graph?
starts at 0 and slopes upwards
what are fixed costs?
costs that do not change with the level of business output
e.g rent or salaries
how does fixed costs look like on a graph?
it stays the same - so it is a straight horizontal line on a graph
what are variable costs?
costs that CHANGE with the level of business output
what is the calculation for total variable costs?
average variable costs x output (quantity)
how does variable costs look like on a graph?
starts at 0 and sloped upwards
how do you calculate average cost?
total cost
________
output
how do you calculate profit?
total revenue - total costs
