2.2.2 - Sales Revenues and Costs Flashcards
1
Q
What is Sales Volume
A
- The quantity of products sold in a specific period
- Sales Volume = Sales revenue / sales price
2
Q
What is sales revenue
A
- Money into your business through sales is called sales revenue (it is also sometimes called turnover). This will be cash paid by customers for your goods. It may help to imagine a cash tin full of coins
- Sales Revenue = Sales price * Sales Volume
3
Q
What is fixed cost
A
- Fixed costs are costs that do NOT vary with the level of output e.g. rent
4
Q
What are some examples of fixed costs
A
- Rent payments
- Mortgage payments
- Loan payments
- Insurances
- Lease of machinery or van (monthly fixed payments)
- Salaries of managers (not wages - which may vary with output) managers will be there no matter what the level of output
5
Q
What is a variable cost
A
- Variable costs are costs that do vary with level of output.
6
Q
What are some examples of variable costs
A
- Examples of variable costs
- Cost of stock sold
- Raw materials
- Fuel
- Packaging
- Wages (not salaries) of staff
7
Q
What is the total variable cost formula
A
Total variable cost = Average variable costs * Quantity sold
8
Q
What is the total costs formula
A
Total costs = Variable costs + fixed costs
