Other costs are largely invariant to the volume of sales, at least within a certain range of sales volumes. The cost of raw materials used to make an item of clothing would be an example of a variable cost. These costs are called variable costs Expenses that change as the the volume of sales changes.
Some cost elements are related to the volume of sales that is, as sales go up, the expenses go up. The collective expenses incurred to generate revenue over a period of time, expressed in terms of monetary value, are the cost The collective expenses incurred to generate revenue over a period of time, expressed in terms of monetary value. The total monetary value of the goods or services sold is called revenue The total monetary value of the goods or services that a business sells.įew businesses are able to sell something without incurring expenses to make the sale possible. In a modern economy, that sale is made in return for money or at least is evaluated in monetary terms. Most businesses sell something-either a physical commodity like an ice cream bar or a service like a car repair.
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