Sales, Revenue and costs Flashcards
What is sales volume?
The quantity of output sold in a particular time period
a)What are the negatives of using sales volume
b)what technique might be used instead?
a)Some industries are hard to identify single units of output
eg measuring the sale volume of a supermarket that sells thousands of products each day
b) sales revenue
what is total revenue?
Amount of money business receives from selling output
a)What is sales revenue?
b)how could it be increased?
a)Value of output sold in particular time period
b)increasing price of product and stimulating more demand
What is the formula for sales revenue?
price x quantity
What is a fixed cost?
cost that does not change as a result of change in output in short run eg rent
What is meant by short run?
time period where at least 1 factor of production is fixed
what is meant by long run?
time period where all FOPs are variable
What is a variable cost
cost that rises as output rises
what is a semi -variable cost
Cost that consists of both fixed & variable elements
What is a total cost?
entire cost of producing a given level of output
What is the formula for TC?
fixed cost (FC) + variable cost (VC)
a)What is average cost (AKA unit cost)
b)why is it important?
a)cost of producing 1 unit
b)determines the profit margin
-the larger the output the lower the unit cost
what is the formula for average cost?
total cost / output
What is profit?
difference between total costs & total revenue
negative=loss
