Theme 2 - Sales Revenue And Costs Flashcards
What does total sales =
Quantity x price
Whats revenue ?
Revenue = quantity x price
What is sales revenues ?
Cash buyers that pay you for goods is sales revenue
What is variable cost ?
The amount that you brought the product from the wholesaler for is variable cost
What is fixed cost ?
A cost that doesn’t change
What is profit ?
Total revenue - Total cost
What is sales volume ?
This is the quantity of products sold in a specified period
Whats the equation for sales volume ?
SV = SR / SP
Sales volume = Sales revenue / Selling prices
What is sales revenue ? And the equation
Money into your business through sales is called sales is called sales revenue ( turnover ) . This will be cash paid by customers for your goods.
SR = SP x SV
What are fixed costs ?
Fixed costs are costs that do NOT vary with the level of output e.g. rent
What are examples of fixed costs ?
- rent
- mortgage
- loan
- insurance
- lease or machinery
- salaries
What are variable costs ?
Variable costs are costs that do vary with the level of output
What are some examples of variable costs ?
- Cost of stock sold
- Raw materials
- Fuel
- Packaging
- Wages (not salaries) of staff
What is the formula for ‘total variable costs’ ?
TVC = AVC x Q
Total variable costs = average variable costs x quantity
Whats total costs ? And what’s the formula
The total costs figure is the sum of all the costs in reaching a certain level of output
TC = VC + FC
Total cost = variable cost + fixed cost
