1. 222 Sales, Revenue and Costs AS Edexcel New Specification 2015 Business
By Mrs Hilton for

2. 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

3. From the specification
a) Calculation of sales volume and sales revenue b) Calculation of fixed and variable costs

4. Guidance from Edexcel

5. Starter
Watch a video and take a test on revenue cost and profit here – you probably know plenty to start with!

7. Calculation of sales volume
This is the quantity of products sold in a specified period (e.g. a year)
Formula:

8. 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
A 250,000 units
B 50,000 units
C 17,391 units

9. Sales revenue
Money into the business through sales (cash tin). May also be known as turnover, or just sales.

10. 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

11. 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
A £220,000
B £37,500
C £130,000

12. Fixed costs
These are costs that do NOT vary with the level of output or sales. E.g. stall rental.

13. 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
Output
500
In this example the fixed costs at 0 production is £40,000 and the fixed costs when making 500 items is £40,000 fc
40,000

14. Variable costs
These are costs that do vary with the level of output or sales. E.g. cost of stock sold

15. 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
Output
500 vc
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 fc

16. Sample questions

17. Sample question 1
2 marks – no context required

18. Answer question 1

19. Sample question 2
2 marks no context required

20. Answer question 2

21. Sample question 3

22. Answer question 3

23. Sample question 4
4 mark question
Case on next slide

26. Sample question 4
2 marks
State the fixed costs

27. Watch the biscuit panda advert here

28. Answer question 4

29. Revision Video

30. 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