According to AmosWeb, total revenue is calculated by multiplying the price received from the product times the quantity of the product sold at that price. Total revenue is usually depicted as a total revenue curve with it being directly related to marginal revenue and average revenue.
Total revenue is important to a firm's short-run production because it is an input in the calculation of profit (total revenue minus total cost). For perfectly competitive firms, the calculation is simplest as the price remains constant at any quantity. However, AmosWeb notes that calculations become complex when dealing with firms that charge different prices at different quantities.Learn More
The formula for total profit, or net profit, is total revenue in a given period minus total costs in a given period. If a business generates $250,000 in total revenue in a quarter, but has $215,000 in total costs, its total profit for the period is $35,000.Full Answer >
Operating margin is calculated by dividing operating income by net sales or revenue. The result is often expressed as a percentage. Operating income is a measurement of profit that includes all expenses except interest and income tax.Full Answer >
Optimal sales price is calculated as the necessary revenue to achieve a desired profit margin divided by the quantity of product units forecast to sell, explains small-business writer Gregory Hamel. A profit margin is the proportion of sales profit a business generates from revenue after subtracting production costs.Full Answer >
The formula for marginal revenue is simply dividing the change in total revenue by the change associated with output quantity. Technically speaking, marginal revenue is the revenue associated with the sale of a single, additional product or unit of output.Full Answer >