Posted on Leave a comment

2.2.2 Sales, revenue and costs

Sales volume – The total number of goods/services that are sold by a business

Sales revenue – The total amount of money earned from the sale of goods/services

Fixed costs – Costs that do not change with the level of business output e.g. rent and salaries

Variable costs – Costs that change with the level of business output e.g. Wages and raw materials

 

A) Calculation of sales volume and sales revenue

Sales revenue = Price x Quantity

Selling price Sales volume Sales revenue
£5.50 40,000 £220,000
30p 125,000 £37,500
£2.00 80,000 £160,000

Sales volume = Sales revenue/Selling price

Sales revenue Sales price Sales volume
£125,000 50p 250,000
£100,000 £1.00 100,000
£115,000 £4.00 28,750

 

B) Calculation of fixed and variable costs

transformation-rules-graphs

transformation-rules-graphs

Average variable cost = £6

Total variable costs = Average variable cost x Output (£6,000)

Leave a Reply

Your email address will not be published.