2.2.2 sales, revenue, costs

• price

  value we set on a product/service that the customer is going to buy it at
• cost

  value of the materials/goods to make and sell the product/service
• variable costs

  • do change with sales
  • eg, packaging and raw materials
  • raw materials are the components used to produce finished goods
• fixed costs

  • do not change with sales
  • eg, rent, salaries, insurance
• variable costs

  • raw materials
  • packaging of products
  • wages
  • bought in stock to sell
• fixed

  • insurance
  • rent
  • salaries
  • advertising campaigns
• total variable costs

  variable costs per unit × quantity
• total costs

  (variable cost per unit × quantity sold) + total fixed costs