2-2-2-sales-revenue-and-costs

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Calculation of sales volume and sales revenue

Sales volume is the number of units sold by a business
- For example, the number of Harry Styles album download purchases
Sales revenue is the value of the units sold by a business
- For example, the revenue earned by Apple Music from sales of music downloads
- Sales revenue is a key business performance measure and must be calculated to identify profit
- Sales revenue is calculated using the formula:

$Sales space revenue space equals space Selling space price space cross times space Number space of space units space sold$

Sales revenue usually increases as the sales volume increases
When a firm sells one product, it is easy to calculate the sales revenue
- The more products a firm sells, the harder it is to calculate the sales revenue
- Computer systems make it easier to track sales revenue when multiple products are sold by the business

Worked Example

Fotherhill Organics Limited sold 39,264 packs of its specialist compost to mail-order customers in 2022. The price per pack was £8.75. In addition, it sold 4,280 tonnes to gardening businesses for £123.95 per tonne.

Calculate Fotherhill Organics’ sales revenue for 2022.

Step 1: Calculate the sales revenue from sales to mail-order customers

$equals space 39 comma 264 space packs space cross times space £ 8.75 equals space £ 343 comma 560$

Step 2: Calculate the sales revenue from sales to gardening businesses

$equals space 4 comma 280 space packs space cross times space £ 123.95 equals £ 530 comma 506$

Step 3: Add together the two sales revenue figures

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Business_A-level_Edexcel

1-marketing-and-people

2-2-2-sales-revenue-and-costs

Calculation of sales volume and sales revenue

Worked Example

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