2.2.2 Sales Revenue and Costs

Question 1

what is sales volume and how is it calculated

Answer 1

the number of units sold in a particular time period

Sales revenue / selling price

Question 2

what is sales revenue and how is it calculated

Answer 2

amount of money generated through the sale of products before any deductions are made

selling price X sales volume

Question 3

what are the 3 types of costs

Answer 3

fixed costs- costs that don’t change with output (rent, salaries, cost of new machinery)
variable costs- rise and fall as output changes (hourly wages, raw material costs, distribution costs)
total costs- fixed costs and variable costs

Question 4

what is the contribution and how is it calculates

Answer 4

the money that is made that contributes to paying off the business’s fixed costs
selling price - variable cost per unit

Question 5

what is profit

Answer 5

the difference between revenue and costs
total revenue - total costs