Business Revenue and Costs

Question 1

what is the definition for revenue?

Answer 1

The value of sales over a period of time

Question 2

what is the equation for revenue?

Answer 2

selling price x sales volume

Question 3

what is the definition for sales volume ?

Answer 3

The quantity of products sold in a particular period of time

Question 4

what is the equation for sales volume?

Answer 4

sales revenue / selling price

Question 5

why is sales volume important?

Answer 5

to compare it to trends over time and gauge how well the product is performing with forecasts or budgets

Question 6

what is the equation for profit?

Answer 6

total revenue - total costs

Question 7

what is the definition for profit?

Answer 7

money left over from sales after all costs have been paid

Question 8

what is the definition for costs?

Answer 8

money a business pays out un order to create and sell its products

Question 9

what is the definition for fixed costs?

Answer 9

costs that do not change with the output produced or the services provided

Question 10

what is the definition for direct costs?

Answer 10

those that can be linked to a product or service

Question 11

what is the definition for indirect costs?

Answer 11

cannot be directly linked to a product or service

Question 12

what is the definition for variable costs?

Answer 12

costs that change in proportion to the amount of output produced or the amount of products sold

Question 13

what is the equation for variable costs?

Answer 13

quantity produced x cost per unit

Question 14

what is the definition for semi variable costs?

Answer 14

composition of both fixed and variable costs fixed to a specific level. They become variable after this production level is exceeded. If there is no production they will be fixed costs

Question 15

what is the equation for semi variable costs?

Answer 15

extra fixed costs + extra variable costs

Question 16

what is the definition for total costs?

Answer 16

the total expenses involved in reaching a particular level of production

Question 17

what is the equation for fixed costs?

Answer 17

fixed costs + variable costs

Question 18

what is the formula for gross profit?

Answer 18

revenue - cost of sales

Question 19

what is operating profit definition?

Answer 19

how much profit has been made in total from trading activities of the business after deducting operating expenses

Question 20

what is operating profit equation?

Answer 20

gross profit - other operating expenses

Question 21

what is net profit definition?

Answer 21

what is left after all costs of a business have been taken from revenue

Question 22

what is net profit equation?

Answer 22

operating profit - interest (from loans)

Question 23

what is the definition of contribution?

Answer 23

The measure of how much each item sold contributes towards the fixed costs of the business

Question 24

what does a higher contribution value indicate?

Answer 24

The quicker the fixed costs are covered

Question 25

what is the equation for contribution?

Answer 25

selling price per unit - variable costs per unit

Question 26

what is the definition for break even point?

Answer 26

the point where total revenue equals total costs

Question 27

what is break even used for?

Answer 27

understanding how many units of output the business needs to sell to cover its costs

Question 28

what is the equation for break even point w/o contribution?

Answer 28

Fixed Costs ÷ (Sales price per unit – Variable costs per unit)

Question 29

what is the equation for break even point with contribution?

Answer 29

total fixed costs / contribution per unit