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
- Average cost
- 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
- Fixed costs
- Profit and loss
- Profit = Total revenue - Total cost
- Total revenue-the amount of money the business receives from selling output
- Sales reveue
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