Calculation of Sales Volume & Sales Revenue
- Sales volume is the number of units sold by a business
- E.g. the number of Harry Styles album download purchases
- E.g. the number of Harry Styles album download purchases
- Sales Revenue is the value of the units sold by a business
- E.g 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
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- Sales revenue usually increases as the sales volume increases
- 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? (3)
Step 1 - Calculate the sales revenue from sales to mail-order customers
39,264 x £8.75 = £343,560 (1 mark)
Step 2 - Calculate the sales revenue from sales to gardening businesses
4,280 x £123.95 = £530,506 (1 mark)
Step 3 - Add together the two sales revenue figures
£343,560 + £530,506 = £874,066 (1 mark)