sales & costs

• Sales


  What a business sells and the money it receives for it
• Denise van Beek of Nordesse Marine: '"Our sales figures and turnover (money received from sales) in the last year are good, with revenue (money from sales) of 14.5 million euros, on volume of 49 boats. This is above our target of 13 million euros. We estimate our sales growth next year at ten per cent, as the world economy looks good and there is demand for our products, so my sales forecast is nearly 16 million euros for next year. I'm relying on you!"'
• Uses of the word 'sale'

  • Make a sale: sell something
  • Be on sale: be available to buy
  • Unit sales: the number of the things sold
  • Sales: a company department
  • A sale: a period when a shop is charging less than usual for goods
  • The sales: a period when a lot of shops are having a sale
• Costs


  The money that a business spends
• Types of costs


  • Direct costs: directly related to providing the product (e.g. salaries)
  • Fixed costs: do not change when production goes up or down (e.g. rent, heating, etc)
  • Variable costs: change when production goes up or down (e.g. materials)
  • Cost of goods sold (COGS): the variable costs in making particular goods (e.g. materials and salaries)
  • Indirect costs, overhead costs or overheads: not directly related to production (e.g administration)
• Costing


  The activity of calculating costs
• Costings


  Amounts calculated for particular things
• Margin


  Selling price minus direct production costs
• Net margin, profit margin or mark-up

  Selling price minus total costs
• Nordsee's boat


  • Selling price = 50,000 euros
  • Direct production costs = 35,000 euros
  • Gross margin = 15,000 euros
  • Total costs = 40,000 euros
  • Net margin, profit margin or mark-up = 10,000 euros
• The net margin or profit margin is usually given as a percentage of the selling price, in this case 20 per cent
• The mark-up is usually given as a percentage of the total costs, in this case 25 per cent
• Use of 'sale'


  • I didn't pay the full price of these shoes. I bought them in sale
  • People queued all night for the beginning of January
  • I mean the Christine who works in Sales, not the one in Accounts
  • The model will go on sale in the UK from next March
• Direct Production Costs


  Costs that can be directly traced to the production of a specific product, such as raw materials, direct labor, and overhead used in the production process.