Sales revenue and costs(2.2.2)

Question 1

What is sales volume?

Answer 1

refers to the number of units of a product or service that a business sells in a certain amount of time such as a week month or year

Question 2

Sales volume-sales revenue and costs

Answer 2

can be measured in different ways according to the nature of the business e.g units litres hours
reflects the quantity of goods or services sold by a business
this allows businesses to track their performance and make informed decisions about their operations such as inventory management pricing strategies and resource allocation

Question 3

What is sales revenue?

Answer 3

the total amount of money a business makes from selling its goods or services over a certain period of time

Question 4

Sales revenue equation

Answer 4

sales revenue = price x quantity sold

Question 5

What are business costs (expenses)?

Answer 5

refer to the money a business has to pay in order to operate and make money from sales
e.g salaries wages rent utilities equipment materials marketing costs

Question 6

Business costs-sales revenue and costs

Answer 6

one of the key aims any business will set when undertaking financial planning activities is to make enough money to cover a;; of its expenses to ensure the business initially survives then makes a profit in the long term
to ensure a business can effectively plan financially and make decisions its crucial that a business has accurate and reliable cost information

Question 7

Variable costs-sales revenue and costs

Answer 7

important consideration for businesses as they directly impact the profitability of each unit produced or sold

Question 8

Variable cost example

Answer 8

raw materials + transaction fees + hourly employee pay

Question 9

What are fixed costs?

Answer 9

expenses that do not vary with the level of output

Question 10

Fixed costs-sales revenue and costs

Answer 10

costs that a business incurs regardless of how much it produces or sells
typically incurred over a certain period and are not directly related to the number of products or services a business produces
important aspect of a business financial planning because they provide a baseline for the minimum expenses that must be covered regardless of the level of production or sales
e.g rent/mortgage wages/salary

Question 11

What are total costs?

Answer 11

refer to the sum of all expenses incurred by a business to produce and sell its products or service

Question 12

Total costs equation

Answer 12

total costs = fixed costs + variable costs

Question 13

Revenue equation

Answer 13

revenue = selling price x quantity sold

Question 14

Average cost equation

Answer 14

average cost = total costs / output