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Business Edexcel A-Level
Theme 2
2.2.2 Sales, Revenue & Costs
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Created by
Max Jefferies
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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