Sales, revenue and costs 2.2.2

Question 1

Define sales volume.

Answer 1

Is the amount of sales expressed as the number of units sold. Income from sales is also known as turnover.

Question 2

Define sales revenue.

Answer 2

Is the amount of sales expressed as the total sum of money spent by consumers. It is the income earned by a business over a period of time.

Question 3

How can sales volume be calculated?

Answer 3

Sales revenue / selling price

Question 4

Define revenue.

Answer 4

Is the money coming in form the sales of goods and services.

Question 5

How do you calculate revenue

Answer 5

Selling price x quantity sold

Question 6

How does revenue look like in a graph?

Answer 6

Starts at 0 and slopes upwards /.

Question 7

What are Fixed costs?

Answer 7

Fixed costs stay the same regardless of output e.g. rent and manager’s salaries.

Question 8

What other things are included in Fixed costs?

Answer 8

Fixed costs also include interest on bank loans

Question 9

What do Fixed costs look like on a graph?

Answer 9

Fixed costs are shown as a straight horizontal line when shown on a graph.

Question 10

What are Variable costs ?

Answer 10

Variable costs change in relation to the number of items produced e.g. raw materials.

Question 11

What is the calculation for Total variable costs?

Answer 11

AVC x Q =TVC

Average variable costs x Quantity = Total variable costs

Question 12

A company has sales revenue of £50 000
Selling price is £2.50
What is the Sales volume?

Answer 12

£50 000/£2.50 = 20 000 units

Question 13

A company sells 20 000 units
Selling price is £2.50
What is the Sales revenue?

Answer 13

£2.50 x 20 000 = £50 000

Question 14

If a business sold 20 000 units at a selling price of £15

What is the Revenue?

Answer 14

£15 x 20 000 units = £300 000

Question 15

A business borrows £30 000
The annual rate of interest is 7.5%
What is the Fixed costs?

Answer 15

£30 000 x 0. 075 = £2250

The business has a fixed interest payment of £2250 per annum

Question 16

What are the Total costs?

Answer 16

The amount of money spent by a firm on producing a given level of output. Total costs are made up of fixed costs (FC) and variable costs (VC).

Question 17

What’s the calculation for Total costs?

Answer 17

Total costs (TC) = Fixed costs (FC) + Variable costs (VC)

Question 18

Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales revenue?

Answer 18

15.00 x 100,000= 1,500,000

Question 19

What do Total costs look like on a graph?

Answer 19

Diagonal line with a positive gradient.

Question 20

Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales volume?

Answer 20

Revenue= selling price x quantity sold
15.00 x 100,000=1,500,000
1,500,000 / 15 = 100,000