2.2.2 Sales, Revenue and Costs

Question 1

What is Sales volume?

Answer 1

Sales volume is the amount of sales expressed as a number of units sold
e.g. 20 tonnes of wool

Question 2

What is Sales revenue?

Answer 2

Sales revenue is the amount of sales expressed as the total sum of money spent by consumers. It is the income earned by a business over a period of time
e.g. one month

Question 3

What is the calculation for Sales volume?

Answer 3

Sales revenue / selling price

Question 4

A company has sales revenue of £50 000
Selling price is £2.50
What is the Sales volume?

Answer 4

£50 000/£2.50 = 20 000 units

Question 5

What is the calculation for Sales revenue?

Answer 5

Selling price x quantity sold

Question 6

A company sells 20 000 units
Selling price is £2.50
What is the Sales revenue?

Answer 6

£2.50 x 20 000 = £50 000

Question 7

What is Revenue?

Answer 7

Revenue is the money coming in from the sale of goods and services

Question 8

What is the equation for Revenue?

Answer 8

Revenue = Selling price x quantity sold

Question 9

If a business sold 20 000 units at a selling price of £15

What is the Revenue?

Answer 9

£15 x 20 000 units = £300 000

Question 10

Revenue increases with the____________ sold and therefore starts at _ and slopes _____ when shown on a graph

Answer 10

Amount of units sold
0
Upwards

Question 11

What are Fixed costs?

Answer 11

Fixed costs stay the same regardless of output e.g. rent and manager’s salaries

Question 12

What other things are included in Fixed costs?

Answer 12

Fixed costs also include interest on bank loans

Question 13

A business borrows £30 000
The annual rate of interest is 7.5%
What is the Fixed costs?

Answer 13

£30 000 x 0. 075 = £2250

The business has a fixed interest payment of £2250 per annum

Question 14

What do Fixed costs look like on a graph?

Answer 14

Fixed costs are shown as a straight horizontal line when shown on a graph

Question 15

What are Variable costs ?

Answer 15

Variable costs change in relation to the number of items produced e.g. raw materials

Question 16

What is the calculation for Total variable costs?

Answer 16

AVC x Q =TVC

Average variable costs x Quantity = Total variable costs

Question 17

What do Variable costs look like on a graph?

Answer 17

Variable costs start at zero and slope upwards when shown on a graph

Question 18

What are the Total costs?

Answer 18

Total costs are fixed costs plus total variable costs

Question 19

What’s the calculation for Total costs?

Answer 19

TC = FC + TVC

Question 20

What do Total costs look like on a graph?

Answer 20

Total costs start at the fixed cost point on the y axis and slope upwards parallel to the variable cost line

Question 21

Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales volume?

Answer 21

100,000 Units

Question 22

Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What is the sales revenue?

Answer 22

? £1,500,000

Question 23

Selling price = £15.00
Quantity sold = 100 000 units
Fixed costs = £40 500
What are the total variable costs?

Answer 23

£600,000

Question 24

If the Total variable costs are £600,000 and the Fixed costs are £40,500, what are the total costs?

Answer 24

£640,500