Revenue, costs and break-even
- Created by: Ruminder Bains
- Created on: 09-05-13 16:32
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- Breakeven, cash flow and revenue
- Sales revenue = Quantity sold x Selling price
- Factors that affect sales: The number of competitors, What competitors do, whether the product is a necessity and how much people are willing to pay on the product.
- To increase sales a business could - increase advertising - sell in more outlets - increase its product range
- Business costs
- Fixed costs
- Variable costs = Quantity sold x Variable cost per unit
- Total costs = Total fixed costs + Total variable costs
- Average costs = Total cost divided by Amount sold
- Break even analysis
- Margin of safety = Actual sales - Break even sales
- Break even output = Total fixed costs divided by (selling price - variable costs)
- Key Words
- Price elasticity of demand = A measure of the change in the level of demand caused by a change in a price
- Short run = A period of time approximately 12 months in length
- Long run = A period of time usually in excess of two years
- Margin of safety = The amount by which a business' actual output is greater than its break even output
- Sales revenue = Quantity sold x Selling price
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