Sales, costs and revenue

• Sales volume- number of units sold in a given time period


  Sales revenue

  ————————

  Selling price
• Sales revenue- value of sales in a given time period


  Sales rev= selling price x sales volume
• Fixed costs- costs that don’t change with output.

  • E.g. rent, salaries, cost of machinery
  • FC= TC-VC
• Variable costs- costs that change with output

  • E.g. Wages, packaging, raw materials
  • VC=TC-FC
• Total variable costs

  Average variable cost x quantity produced
• Profit

  Total revenue- total costs