3.2 Costs and Revenue

Question 1

Define Sales Revenue (Sales Turnover).

Answer 1

Refers to the income from the sale of goods and services.

Question 2

Total Revenue (TR)

Answer 2

Calculated by multiplying the quantity sold by the unit price. (Total SR = Price * Quantity sold)

Question 3

Define Profit.

Answer 3

The positive difference between total revenue and total costs. (Profit = TR - TC)

Question 4

Define Revenue Streams.

Answer 4

Various sources of income.

Question 5

Define Break-Even and Formula.

Answer 5

When a business sells enough goods and/or services in order to cover all its costs of production. (does not make any profit or loss). (Break Even = FC / (SP - Variable cost per unit).

Question 6

What is Contribution per unit.

Answer 6

Refers to the amount of money a business earns from selling each unit of output. The surplus is used to contribute towards the payment of fixed costs. (CPU = Price per unit - Variable Cost per Unit)

Question 7

What is Total Contribution.

Answer 7

Used to work out profit or loss.
(Total contribution = (Price - Variable Costs per unit)*Quantity)