Price, sales & total revenue

My notes on price, sales and total revenue for the BUSS1 exam

HideShow resource information
Preview of Price, sales & total revenue

First 462 words of the document:

Pri
ce,
Tot
al
R evenue
& Prof
it
The
amount
pai
d by
a consumer
t
o pur
chase
1 uni
t
of
a pr
oduct
Pri
c e
A
me a s ure of t
he i
nc ome rece i
v e d
from a n
org ani
s at
ions
ac t
i vi
ti
es
Tot al
Reve nu e To t
al R eve nue
= p r
ice
pe r
unit
x
q uanti
ty
of uni
ts
sold
£ 100
= £ 10 x
1 0
T he
d iff
e rence betwe en the inco me
o a
b usines s
a nd
it
s t
otal costs
Pro f
it
Profi
t = tot
a l
rev e nue ­
to t
al
co st
s
A business must set a price that is:
High enough to cover the production of the product
Low enough to attract customers
The I D EAL
S ELLI
N G PR I
C E is the price that helps the firm to make the most
profit.
Total revenue may also be referred to as:
Income
Revenue
Sales turnover
Sales revenue
Turnover
Making a profit is the prime objective of most firms. Effectively there are 2 ways to
increase profit:
1. Increasing sales revenue
2. Decreasing costs
Or a combination of both.
Some functional areas of the business (e.g. administration or production) can
help to reduce costs. However, they must be careful not to reduce the quality of
the product. How can these areas cut down?
ADMIN stationary, staff, computer systems
PRODUCTION machines instead of people, outsourcing (obtaining goods from
a source outside the business)
Fi
xe d cost
s Cos t
s that s t
a y
th e
s ame
(
e g r
e nt
)
Var
iabl
e cost
s Cost
s t
hat
coul
d change
in
pri
ce
(eg
raw mat
eri
als)
Tot
al
cost
s The
sum
of
fi
xed
cost
s and
var
iabl
e cost
s

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all resources »