Sales revenue, costs and profit

  • Created by: jeeri
  • Created on: 16-04-18 09:34
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  • Sales, revenue and cost
    • Sales reveue
      • The value of output sold in a particular time period. It is calculated by price X quantity of output
    • Sales volume
      • Sales volume -the quantity of output sold in a particular time period
    • Business costs
      • Fixed costs
        • A cost that does not change as a result of a change in output in the short-run
        • Stepped fixed cost
          • If a firm is at full capacity but needs to raise production, it might decide to invest more equipment
        • Examples are rent, insurance, heating bills, depreciation and business rates
      • Variable costs
        • A cost that rises as output rises
        • Semi-variable cost - a cost that consists of both fixed and variable elements
        • Examples are raw materials and packaging
      • Total cost
        • Average cost
          • Total cost divide by output
        • TC = FC + VC
      • Period
        • Short-run is the period where at least one factor of production is fixed
        • Long run is the time period where all factors of production are variable
    • Profit and loss
      • Profit = Total revenue - Total cost
    • Total revenue-the amount of money the business receives from selling output

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