Revenue Formula

Revenue is the total revenue gained via the sale of goods and services by the enterprise. Thus, revenue is the most significant aspect to define the improvement of any company. The revenue formula is utilized to find the revenue. We estimate the revenue by seeing the outcome of the number of sales and selling price. In this area, we will be examining the different elements of the revenue formula and comprehending the variables applied. Let us understand the revenue formula with a few solved illustrations.

Revenue Formula

The word revenue signifies the quantity of revenue induced by the firm by the sale of goods and services via its functions. Revenue is also called total profits or the profit earned by the enterprise. The revenue formula relies on the firm of the business. For instance, a product sale is computed by assuming the average price at which the goods are sold additionally multiplied by the total numeral of product sales. In the case of service organizations, revenue is estimated by bearing the numeral of consumers by the moderate price of services. Revenue is calculated by multiplying the numeral of goods sold and the moderate selling price of the goods. 

The revenue formula is given as,

Revenue Formula = Number of goods sold × Sales Price

Revenue Formula = Number of customers × Average price of services

Revenue = Price × Units sold

Sample Problems

Problem 1: Using the revenue formula, determine the revenue of a day if a shopkeeper sells 100 articles each costing $20.

Solution:

Here, quantity = 100 and selling price = $20

Using the revenue formula, we get

Revenue = quantity × sales price

= $(100 × 20)

= $2000

Therefore, the revenue of the shopkeeper for the day is $2000.

Problem 2: Find the sales price of the goods if 50 goods are sold and revenue is $800.

Solution:

Here, quantity = 50 and revenue = $800

Using the revenue formula, we get

Revenue = quantity × sales price

$800 = 50 × selling price

Selling price = $(800 ÷ 50) = $16

Therefore, the price of goods is $16

Problem 3: Find the number of goods by using the revenue formula, if the selling price is $60 and the revenue is $6000.

Solution:

Here, revenue = $6000 and selling price = $60

Using the revenue formula, we get

Revenue = quantity × sales price

6000 = quantity × 60

Quantity = 6000 ÷ 60

Quantity = 100

Therefore, the quantity is 100. 

Problem 4: What will be the revenue of a pen selling shop, if it is selling 600 pens for Rs. 5 each?

Solution:

 As we know that revenue formula is given as:

Revenue = Quantity × Price

Given parameters are,

Quantity = 600

Price = Rs. 5

So, Revenue = 600 × 5

Revenue = Rs. 3000

Thus the revenue will be Rs. 3000.

Problem 5: What will be the price of the goods, if the number of sold items is 5 and, the total revenue is Rs. 2000?

Solution: 

As we know that revenue formula is given as:

Revenue = Quantity × Price

Given parameters are,

Revenue = 2000

Quantity = 5

So, Price = Revenue / Quantity

Price = 2000 / 5

Price = Rs. 400

Thus the price will be Rs. 400.