2.2.2 Sales, Revenue & Costs

    Cards (13)

    • Sales volume is the number of units sold by a business
    • Sales Revenue is the value of the units sold by a business
    • Sales revenue calculation
      Sales revenue = Total units sold X selling price
    • Fixed costs (FC) are costs that do not change as the level of output changes
    • Variable costs (VC) are costs that vary directly with the output
    • Total costs (TC) are the sum of the fixed + total variable costs 
    • Total costs calculation
      TC = Total fixed costs + total variable costs
    • Total variable costs Calculation
      Total variable costs = Variable costs X quantity
    • Average total cost calculation
      Average total cost = Total costs / quantity
    • Variable cost per unit calculation
      Total variable costs / number of units sold
    • Contribution
      • Contribution refers to a product’s selling price minus the variable costs directly involved in producing that unit
    • Contribution = Selling price per unit - variable cost per unit
    • It is called contribution as this amount contributes towards paying off the fixed costs of the business