Sales Revenue and Costs

What does sales volume measure?

The quantity of units sold over a period.

How is sales revenue calculated?

Selling price × sales volume.

How can sales volume be calculated from revenue?

Sales revenue ÷ selling price.

What are fixed costs?

Costs that remain constant as output changes.

What are variable costs?

Costs that change with production volume.

How are total costs calculated?

Fixed costs + variable costs.

What happens to average fixed cost as output rises?

It falls.

How can high sales volume benefit a business?

It can create economies of scale.

What might growing sales volume indicate?

The business may be gaining market share.

Why can high volume at low prices be risky?

It may reduce gross profit margins.