Sales revenue and costs

• What are the key concepts related to sales?

  Sales volume, sales revenue, and cost calculations
• Why is understanding sales volume important for a business?

  It helps assess performance and meet targets
• What does sales volume refer to?

  Number of units sold in a period
• How is sales volume calculated?

  Sales Volume = Number of Units Sold
• If a company sells 500 units in a month, what is the sales volume?

  500 units
• What is sales revenue?

  Total money generated from sales
• How is sales revenue calculated?

  Sales Revenue = Sales Volume × Price per Unit
• If a company sells 500 units at £20 each, what is the sales revenue?

  £10,000
• What are fixed costs?

  Expenses that do not change with output
• Give examples of fixed costs.

  • Rent, salaries, insurance, depreciation
• What are variable costs?

  Expenses that change with output levels
• Give examples of variable costs.

  • Raw materials, direct labor, sales commissions
• How are total fixed costs calculated?

  Sum of all fixed costs
• If rent is £2,000, salaries are £3,500, and insurance is £500, what are the total fixed costs?

  £6,000
• What is the formula for variable cost per unit?

  Variable Cost per Unit = Total Variable Costs / Sales Volume
• If total variable costs are £7,500 and sales volume is 500 units, what is the variable cost per unit?

  £15
• How are total costs calculated?

  Total Costs = Fixed Costs + Variable Costs
• If fixed costs are £6,000 and variable costs are £7,500, what are the total costs?

  £13,500
• What is the break-even point?

  Point where total revenue equals total costs
• How is the break-even point calculated in units?

  Break-Even Point = Fixed Costs / (Selling Price - Variable Cost)
• If fixed costs are £6,000, selling price is £20, and variable cost is £15, what is the break-even point in units?

  1,200 units
• What is the example summary for sales, revenue, and costs calculations?

  • Sales Revenue: £10,000
  • Fixed Costs: £6,000
  • Variable Costs: £7,500
  • Variable Cost per Unit: £15
  • Total Costs: £13,500
  • Break-Even Point: 1,200 units
• What is the conclusion regarding sales, revenue, and cost calculations?

  • Essential for understanding profitability
  • Important for financial health assessment
  • Necessary for informed business decisions