What is price times quantity equal to?

What is price times quantity equal to?

• A. Total revenue
• B. Profit
• C. Contribution margin
• D. Net income

Answer: (A)

Multiplying price per unit by quantity sold gives total revenue—the total money a business brings in from selling goods or services, before any costs are subtracted. It’s the top-line figure that reflects how much sales activity occurred. This is different from profit, which subtracts all costs, or net income, which is profit after taxes and other non-operating items. It’s also different from contribution margin, which looks at revenue minus variable costs to see how much is available to cover fixed costs. For example, selling 100 units at $20 each yields total revenue of $2,000.

Multiplying price per unit by quantity sold gives total revenue—the total money a business brings in from selling goods or services, before any costs are subtracted. It’s the top-line figure that reflects how much sales activity occurred. This is different from profit, which subtracts all costs, or net income, which is profit after taxes and other non-operating items. It’s also different from contribution margin, which looks at revenue minus variable costs to see how much is available to cover fixed costs. For example, selling 100 units at $20 each yields total revenue of $2,000.