Sales, Revenue and costs

• Total variable costs =

  cost per unit x total number of units
• Total costs = 


  fixed costs + variable costs
• Examples of fixed costs

  • rent
  • insurance
  • salaries
  • loan payments
• Examples of variable costs

  • wages
  • raw materials
  • packaging
• Sales volume =


  number of units sold
• Sales revenue = 


  value of units sold
• Average total cost =

  variable cost

  quantity
• Variable cost per unit =

  total variable costs

  quantity
• Contribution =

  selling price per unit - variable cost per unit