How To Calculate Revenue

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How To Calculate Revenue
How To Calculate Revenue

Video: How To Calculate Revenue

Video: How To Calculate Revenue
Video: Total Revenue 2024, December
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There are two ways to calculate revenue: direct and reverse account. Each of them is used in a specific situation. The methodology for using direct account is based on the fact that the demand is known in advance. And using the calculation method, revenue is determined in case of unstable demand.

How to calculate revenue
How to calculate revenue

Instructions

1. Calculation of revenue using the direct account method:

Determine the number of products sold over a certain period of time.

2. Indicate the price per unit of products, goods or services sold.

3. To calculate revenue, multiply the quantity of products by the unit price. The resulting number will be the proceeds from the sale of products.

How to calculate revenue
How to calculate revenue

4. There is a dependence of the number of goods sold on the coefficient of elasticity of supply, which can also significantly affect the revenue. To check this, it is enough to consider three cases: when the coefficient is greater or less than one, and when it is equal to zero.

How to calculate revenue
How to calculate revenue

5. In the event that the coefficient of elasticity is significantly less than one, then a one percent change in price will lead to a change in demand by less than one percent.

6. If the ratio is greater than one, then a one percent change in price will lead to a change in demand by more than one percent.

How to calculate revenue
How to calculate revenue

7. If the ratio is equal to one, then a one percent change in price will result in a one percent change in demand.

8. Thus, you can calculate the dependence of demand on the price per unit of production, and hence the revenue from its sale.

How to calculate revenue
How to calculate revenue

9. Calculation of profit using the calculation method in case of unstable demand:

Find the number of products that are not sold at the beginning of the current period.

10. Determine the number of items to be released for the current period.

11. Now calculate the planned balances from the number of unsold items at the end of the current period.

How to calculate revenue
How to calculate revenue

12. Then from the quantity of unsold product at the beginning of the current period, subtract the planned balances of unsold products at the end of this period, and add the number of goods that are being prepared for release during the reporting period. Thus, you will find the proceeds from the sale of products. This means that you managed to calculate revenue using the calculation method in case of unstable demand.

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