2.2.2 Sales, Revenue, and Costs

• What is sales revenue defined as?

  Total income from sales
• Sales revenue is calculated by multiplying the quantity of units sold by the price
• The formula for sales revenue is: Sales Revenue = Quantity Sold × Price per Unit
• How is total sales revenue calculated?

  Quantity sold × Price per Unit
• Total sales revenue represents the total income before any deductions
• Sales revenue is calculated using the formula: Sales Revenue = Quantity Sold × Price per Unit
• What are fixed costs and variable costs examples of?

  Types of expenses
• Variable costs fluctuate with the level of production
• Match the cost type with its characteristic:

  Fixed Costs ↔️ Remain constant

  Variable Costs ↔️ Change with production
• What is an example of a fixed cost?

  Rent
• Fixed costs are easier to budget than variable costs
• Total revenue is calculated by multiplying the quantity sold by the price
• What are the two main types of costs?

  Fixed and Variable
• What are variable costs influenced by?

  Production or sales level
• Fixed costs remain constant
• Salaries are an example of variable costs.

  False
• How do fixed costs behave with changes in output?

  They remain constant
• Fixed costs are easier to budget
• What are examples of fixed costs?

  Rent and salaries
• Variable costs are tied to production levels
• How do variable costs impact profitability?

  Directly based on volume
• Understanding fixed and variable costs is essential for cost management.
• What is the formula for total costs?

  $\text{Fixed Costs} +$$\text{Variable Costs}$
• What does contribution margin indicate?

  Revenue after variable costs
• Contribution margin is calculated as sales revenue minus variable
• If a product sells for $50 and has variable costs of $30, the contribution margin is $20.
• What is the break-even point in terms of units or revenue?

  Revenue equals total costs
• The break-even point in units is calculated as fixed costs divided by sales price per unit minus variable cost per unit
• If fixed costs are $50,000, sales price per unit is $100, and variable cost per unit is $60, the break-even point in units is 1250.
• What is the formula for sales revenue?

  \text{Quantity Sold} \times \text{Price per Unit}</latex>
• Total revenue is calculated by multiplying quantity sold by price per unit.
• What are the two primary types of costs in business accounting?

  Fixed and variable costs
• Rent is an example of a fixed
• Raw materials are a type of variable cost.
• What does the contribution margin represent after variable costs are subtracted?

  Fixed costs and profit
• The contribution margin formula is sales revenue minus variable costs
• The break-even point is where total revenue equals fixed costs only.

  False
• What are three applications of sales, revenue, and costs in business decision-making?

  Pricing, production, forecasting