1.31 Sales, Revenue And Costs Flashcards
(27 cards)
What is sales volume?
The number of units sold by a business.
Why do businesses aim for year-on-year growth in sales volume?
It is a measure of business performance.
How do sales volume measurements vary by business type? Give examples.
- Cereal farmers – Tonnes of wheat sold
- Car manufacturers – Number of cars sold
- Airlines – Number of passengers carried
- Hotels – Number of rooms let
- Dairy farmers – Litres of milk sold
- Power generators – Megawatt hours sold
Calculate the sales revenue for Gortex Mining Ltd if they sold 1,433,400 tonnes of limestone at £12.60 per tonne.
£18,060,840.
What is sales revenue?
The total value of products sold by a business.
What is the formula for calculating sales revenue?
Sales Revenue = Price × Quantity of Output.
What were Manchester United’s main revenue sources in the 2012/13 season?
- Commercial activities (£177.6m)
- Broadcasting (£118.6m)
- Matchday revenue (£127.3m)
Why do businesses track costs?
To ensure they price products correctly and maintain profitability.
Define fixed costs.
Costs that stay the same regardless of output.
Give two examples of fixed costs.
- Rent
- Insurance
What are stepped fixed costs?
Some fixed costs increase in steps due to capacity limits.
Define variable costs.
Costs that increase as output increases.
Give two examples of variable costs.
- Raw materials
- Wages (if tied to production)
What are semi-variable costs?
Costs that have both fixed and variable components.
What is total cost?
The sum of fixed costs and variable costs.
What is the formula for total cost?
Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC).
Calculate the total cost for a doll manufacturer with fixed costs of £400,000 and variable costs of £2 per unit if output is 100,000 dolls.
£600,000.
What is average cost?
The cost per unit of production.
What is the formula for average cost?
Average Cost = Total Cost ÷ Output.
Calculate the average cost if total cost is £600,000 and output is 100,000 dolls.
£6 per unit.
How is profit calculated?
Profit = Total Revenue - Total Costs.
What happens when total costs exceed revenue?
Loss occurs.
Calculate the profit for a doll manufacturer selling 300,000 dolls at £5 each with total costs of £1,000,000.
£500,000.
What is the difference between sales volume and sales revenue?
Sales volume is the number of units sold; sales revenue is the total income from sales.
