Sales volume, revenue and costs. Flashcards
What is sales volume?
The number of units sold in a given time period.
What is sales revenue?
Different to actual revenue, which is any inflow, but usually from sales.
- This is the value of sales in a given period; the amount of money generated by sales of a product before any deductions are made.
Formula for sales revenue?
Sales volume x selling price.
What is the formula for sales volume?
Sales volume = Sales rev/ selling price.
What are fixed costs?
These are costs that do not change based on output. E.g. rent, business rates, salaries and bank loans are fixed costs as they are a fixed amount which are usually the same owed by a business every month. Interest rates are also fixed costs as they are required every month usually, depending on the agreement with the bank.
What are variable costs?
These are costs that rise and fall depending on output. For example, hourly wages, raw material and packaging for each product are all variable costs.
What is the formula for total variable costs?
Total variable costs = Average VC x quantity produced.
Formula for total costs.
Fixed costs plus VC.
What is profit. When does a business profit?
The figure you receive when deducting a businesses total revenue from total costs. A business profits when total revenue is greater than total costs and vice versa with a loss.
