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sales, revenue and costs - Coggle Diagram
sales, revenue and costs
How to measure how much a business has sold
sales volume
sales revenue
sales volume x selling price
to boost revenue business can:
increase selling price without having major impact on sales vol
increase sales volume without reducing selling price significantly
PRICE ELASTICITY
price elastic
price increase = rev rises
price decrease = rev falls
price ineslastic
price decrease = rev rises
price increase = rev falls
CALCULATING FIXED AND VARIABLE COSTS
VARIBALE COSTS
costs that change in direct proportion to level of output egmanufcature doubles amount produced, cost of materials will doible
EXAMPLES
raw materials
packaging
fuel costs
peice rate pay
total variable costs = variable cost per unit x number of units produced
variable costs may not actually rise in direct proportion to output
as business increases output, it is able to negotiate lower price for material suppliers = cost of materials not quite double as output doubles
TOTAL COSTS
fixed costs + variable costs
shows total costs of running a business for a period of time
FIXED COSTS
do not change as output changes
linked to time eg rent per month
fixed in relation to amount produced eg great or awful month, FC stays the same unless something changes eg more rent
EXAMPLES
rent
interest charges
heating and lighting