222 sales, revenue and costs as edexcel new specification 2015 business by mrs hilton for
TRANSCRIPT
222 Sales, Revenue and CostsAS Edexcel New Specification 2015 Business
By Mrs Hilton for
Lesson Objectives
• To be able to calculate sales volume• To be able to calculate sales revenue• Calculation of fixed costs• Calculation of variable costs• To be able to answer sample exam questions
based on the topic area
From the specification
a) Calculation of sales volume and sales revenueb) Calculation of fixed and variable costs
Guidance from Edexcel
Starter
• Watch a video and take a test on revenue cost and profit here – you probably know plenty to start with!
Calculation of sales volume
• This is the quantity of products sold in a specified period (e.g. a year)
• Formula:
Sales volume
• Calculate the sales volume for these 3 businesses:
• Express answers in number of units sold
SR SP SV
A £100,000 40p
B £60,000 £1.20
C £80,000 £4.60
Sales revenue• Money into the business through sales (cash
tin). May also be known as turnover, or just sales.
Calculation of sales revenue
The formula for calculating sales revenue is:
This is also the reverse of the sale volume, where quantity is the same as sales volume
Sales revenue
• Calculate the sales revenue for these three business
• Express answers in £
SP SV SR
A £5.50 40,000
B 30p 125,000
C £2.00 65,000
Fixed costs
• These are costs that do NOT vary with the level of output or sales. E.g. stall rental.
Calculation of fixed costs• These costs are the same at all levels of production; rent, rates, insurance,
salaries, lease of machinery.• 0- full capacity the fixed cost line will be the same• In the long term costs may rise due to inflation but in the short term these have
to paid even if there is no output
£ cost
Output0 500
40,000
In this example the fixed costs at 0 production is
£40,000 and the fixed costs when
making 500 items is £40,000
fc
Variable costs
• These are costs that do vary with the level of output or sales. E.g. cost of stock sold
Calculation of variable costs• Variable costs change with the amount of goods being produced• For example; raw materials, fuel, packaging, wages (not salaries) of
staff who only work when it is busy• At zero output costs are zero
£ cost
Output0 500
In this example the variable cost line is
red, at 0 output costs are zero, but as output rises to 500 the costs rise
too
vc
fc
Sample questions
Sample question 1
2 marks – no context required
Answer question 1
Sample question 2
2 marks no context required
Answer question 2
Sample question 3
Answer question 3
Sample question 4
• 4 mark question• Case on next slide
Sample question 4
• 2 marks• State the fixed costs
Answer question 4
Glossary
• Sales revenue; Also known as turnover, this is the amount the business is sold and is calculated by price x quantity, or p x q
• Sales volume; the quantity sold• Fixed cost; A cost to the business which does
not vary with output• Variable cost; A cost to the business which
does vary with output