Sales Revenue (DP IB Business Management)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Revenue & Revenue Streams
Sales Revenue is the value of the units sold by a business over a period of time
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
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 4,275 tonnes to gardening businesses for £123.95 per tonne.
Calculate Fotherhill Organics sales revenue for 2022? [3 marks]
Answer:
Step 1 - Calculate the sales revenue from sales to mail-order customers
39,264 x £8.75 = £343,560 [1]
Step 2 - Calculate the sales revenue from sales to gardening businesses
4,280 x £123.95 = £530,506 [1]
Step 3 - Add together the two sales revenue figures
£343,560 + £530,506 = £874,066 [1]
Revenue streams
Revenue can be generated from sources other than sales
These sources are called revenue streams
Diagram: revenue streams
An Explanation of Revenue Streams
Revenue Stream | Explanation | Example |
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Dividends |
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Donations |
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Interest |
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Subscription fees |
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Merchandise |
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Sponsorship |
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Advertising Revenue |
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