sales, revenue and costs Flashcards
what’s the calculation of sales volume
sales revenue divided by price
define sales volume
quantity of product sold in a specific period
define sales revenue
money into the business through sales
what’s the calculation of sales revenue
price x quantity
do fixed costs stay the same regardless of output
yes
how are fixed costs shown
as a straight horizontal line on a graph
define variable costs
costs vary with the level of output or sales
what’s the total variable cost
average variable costs x quantity sold
define break even
the point where revenue equals costs so the business is making neither a profit nor loss
contribution calculation
selling price - variable costs
define contribution
the amount that each unit produced contributes towards the fixed costs
break even calculation
fixed costs divided by selling price - variable costs
margin of safety formula
actual sales - break even level of sales
define margin of safety
the difference between actual output and the break even output
