Calculating Revenue Flashcards
How do you calculate profit?
Profit = sales revenue - total costs
How do you calculate sales revenue?
Sales revenue = price of product * quantity sold
What are the various sources of revenue?
Revenue is the income received by business from sources such as:
Sales
Leasing
Interest
What are sales?
Selling something / exchanging something for money.
The main source of revenue for most organisations because the customers pay for the goods or services they buy.
What are costs?
The monetary value that a company has spent in order to produce something.
What are fixed costs?
Also known as overheads, they are costs which don’t vary with the output produced.
What are variable costs?
Costs which vary directly with the output of the business.
How do you calculate variable cost?
Variable cost = v.c. per unit * quantity sold
How do you calculate fixed costs?
These are costs which don’t vary with output - won’t be calculated
How do you calculate total costs?
Total costs = variable costs + fixed costs
Example: Tuna salad selling price = £9 Ingredients for one salad = £4 Fee to sell in streets = £50/day They sell 60 salads a day
Calculate the sales revenue, total cost and profit.
Sales revenue = selling price * quantity sold
S.R. = 9 * 60 = £540
Total cost = V.C. + F.C.
Total cost = (4 * 60) + 50 = 240 + 50 = £290
Profit = sales revenue - total costs Profit = 540 - 290 = £250
What is revenue?
The total value of sales made by the business within one year.
How can costs be reduced?
Improved purchasing or cheaper suppliers Better design of products Cheaper labour costs Cutting overhead costs Streamline the production process Relocation
