sales, revenue + costs

• What is sales revenue?

  Total sum of money from sales
• How is sales volume calculated?

  Sales revenue/selling price
• How are fixed costs represented on a graph?

  As a straight horizontal line
• How do you calculate total variable costs?

  Average variable costs multiplied by quantity
• What are the four lines to draw on a cost-revenue graph?


  1. Revenue
  2. Fixed costs
  3. Variable costs
  4. Total costs
• How can you identify profit and loss on a graph?

  By comparing revenue and total costs
• What is the formula for calculating sales revenue?

  Sales revenue = Price x Quantity
• How is sales volume defined?

  Sales volume is the number of units sold
• Why is calculating sales revenue more complicated than sales volume?

  It involves different prices for products sold
• If a business sells 20 units at £5.50 each, what is the sales revenue?

  £110
• What is the sales revenue for 12,500 units sold at £7.50 each?

  £93,750
• Calculate the sales revenue for 80,000 units sold at £20 each.

  £1,600,000
• What happens to revenue if a price elastic product's price is decreased?

  Revenue rises
• What is the effect on revenue if the price of a price inelastic product is increased?

  Revenue rises
• What are the two classifications of costs in a business?

  Fixed costs and variable costs
• What are fixed costs?

  Costs that do not change with output
• How are fixed costs represented on a graph?

  As a straight horizontal line
• What are variable costs?

  Costs that change with the level of output
• If a manufacturer doubles production, what happens to variable costs?

  They would typically double
• What is the formula for total costs?

  Total costs = Fixed costs + Variable costs
• If fixed costs are £300,000 and variable costs are £18 per person for 10,800 stays, what is the total cost?

  £300,000 + £194,400 = £494,400
• If a hotel has total costs of £494,400 and sales revenue of £500,000, what is the profit?

  £5,600
• What are the two ways to measure sales in a business?

  Sales volume and sales revenue
• If a business aims to increase profit by 5% annually for three years, what will be the profit in three years if the current profit is £100,000?

  £115,762.50
• What are the implications of having high fixed costs for a business?

  • Need to maximize sales volume
  • Fixed costs are spread over more units
  • Helps in achieving profitability
• How do fixed and variable costs affect business operations?

  • Fixed costs remain constant regardless of output
  • Variable costs change with production levels
  • Understanding both helps in pricing and profitability strategies
• What strategies can businesses use to boost revenue?

  • Increase selling price without losing sales volume
  • Increase sales volume without significantly reducing price
• What is the relationship between sales revenue and sales volume?

  • Sales revenue is calculated from sales volume
  • Higher sales volume typically leads to higher sales revenue