1. LEARNING AIM A: Understand the costs involved in business and how businesses make a profit.

2. Topic A.2: Understand how businesses make a profit

3. REVENUE
Revenue is the income earned by a business from selling their product (goods and/or services) to customers.
Revenue can be calculated by multiplying the number of sales by the price per unit.
Revenue = Number of sales x price per unit

4. Money paid for use of money borrowed.
Sources of revenue
Type
Definition
Examples.
Loan
A sum of money lent by a lender, i.e. bank. To be repaid, with interest.
Business loan from NatWest to be paid back over 36 months at £150 per month including the 15% interest rate.
Interest
Money paid for use of money borrowed.
Interest received on a business account at NatWest.
Sales
Generated from selling a product, experience or service, to a customer.
Sale of cars

5. Profit/Loss = Total revenue – Total cost
Price, Cost and Profit
Profit/Loss = Total revenue – Total cost

6. Profit/Loss = Total revenue – Total cost
Profit or Loss 
Profit/Loss = Total revenue – Total cost

7. Practice Questions Exam Question
Dunlop sell 20,000 tennis balls at £2 each
Total revenue will be £ _ _ _ _ _
Boots sell 26,000 bottles of shampoo at £2.65 each
Exam Question
A company makes 50,000 gift bags at a total cost of £17,500. All 50,000 are sold at £1.50 each. Which of the following statements are true (CALCULATE THEM FIRST)?
The business’s total revenue is £50,000.
The average cost of making each bag is £0.35.
After subtracting total costs from revenue, the business is left with £57,500.
If the selling price of each bag had been any lower, they would not have made a profit.
The business made a profit of £32,500.
If only 25,000 bags had been sold, the business would not have made a profit.

8. Final Question
Calculate the total revenue for one week if Ford sells 2000 cars at £ , 1500 cars at £12,500 and 1000 cars at £15.000?