Revenue Meaning, Formula, Calculation, and Example - Orchids
Job Alert : To view our Careers Page Click Here X
info@orchids.edu.in (+91) 8-888-888-999
ORCHIDS The International School

Revenue Meaning

In this concept, students will learn about revenue meaning. Also, they will study revenue definition, revenue vs net income, revenue examples, total revenue formula, revenue vs profit, the difference between revenue and profit, etc., that connect students with the mathematical concept simplification, comparing numbers.

What Is Revenue?

Revenue is the money brought into a company by its business activities. It is the amount a company receives from selling its products or providing service to its customers and clients. In an income statement, the revenue meaning should be reported in the first line, often described as sales or service revenue meaning.

Revenue Vs Net Income:

Net income is the difference between revenue and expense. Revenue is the amount earned from customers and clients before deducting the company’s expenses.

Difference Between Revenue and Net Income:

Revenue Vs net income

Revenue Examples:

  1. Revenue of Government is the money received from taxation, fees, fines, inter-governmental grants or transfers, securities sales, mineral or resource rights, and any sales made.
  2. For non-profitable organisations’ revenue includes donations from individuals, foundations, and companies: grants from government entities, investments, fundraising activities, and membership fees.
  3. In the case of Real estate investments, revenue refers to the income generated by a property, such as rent or parking fees. When the operating expenses are incurred in running the property income, the resulting value is the net operating

Total Revenue Formula:

total revenues formula

Difference Between Revenue and Profit:

Profit is the reward to business owners for investing. Profit is the income remaining after all expenses. In the income statement, profit is also referred to as net income. But net income and profit are different sometimes.

revenue chart

It is the difference between the total revenue and expense calculated for a given period. A business profits when the expense is always less than the total revenue.

Revenue Vs Profit:

Revenue Vs profit

Profit is always lower than revenue because we profit only when the liabilities and expenses are deducted from revenue.

If the expenses of a business are less than the total revenue, then the business is said to make a loss.

Revenue Loss:

Revenue loss

Multiplication Sums for Class 3

Example:

A Company Has Determined That if the Price of an Item Is Rs 40, Then 150 Will Be Demanded by Consumers. When the Price Is Rs 45, 100 Will Be Demanded by Consumers. Find the Revenue for Both Cases.

Answer:

For the 1st case, the revenue will be
150 × Rs 40 = Rs 6000
For the 2nd case, the revenue will be
100 × Rs 45 = Rs 4500

Addition, Subtraction and Multiplication:

Question 1:

A Chef Sells 640 Sandwiches in the Market for Rs 10 per Each. He Has Done a Market Survey and Got to Know That Reduction of Rs 2 in Price Will Help Him to Sell 60 Sandwiches More. If He Started Selling Sandwiches at a Reduced Price, he would Find His Change in Revenue. Also, Write Down if the Revenue Increased or Decreased.

Answer:

The total revenue of the chef when he sold 640 sandwiches in the
market for Rs 10 per each is
640 × Rs 10 = Rs 6400

Now, if the sandwich’s price is decreased by Rs 2, then now the
cost of the sandwich is
Rs 10 – Rs 2 = Rs 8

The number of selling sandwiches increases when the price is
reduced.
Then the number of sandwiches sold is
640 + 60 = 700
So, the total revenue of the chef when he sells 700 sandwiches for
the Rs 8 per each is
700 × Rs 8 = Rs 5600
The change in revenue is
Rs 6400 – Rs 5600 = Rs 800

Hence, the change in revenue after the difference in price and the change in the number of sandwiches sold is Rs 800. In this case, the income has decreased in the second case.

Question 2:

A Fruit Seller Sells 640 kg of Mango in the Market for Rs 80 per Kg. But Another Fruit Seller on the Market Has Sold 40 kg Lesser Mango Than the First Seller for Rs 20 per Kg Increased Price. Find Who Has Earned More Revenue. Also, Find the Difference Between Their Revenue. Whose Revenue Is Greater?

Answer:

The total revenue of the first fruit seller when he sells 640 kg of mango in the market for Rs 80 per kg is 640 × Rs 80 = Rs 51200

If the second fruit seller has increased the price of the mango by Rs 40 per kg. So, he sold the mango at the price Rs 80 + Rs 20 = Rs 100

The second fruit seller sold 40 kg less mango than the first. So, the second fruit seller has sold 640 kg – 40 kg = 600 kg

The total revenue of the second fruit seller when he sells 600 kg of mango in the market for Rs 100 per kg is 600 × Rs 100 = Rs 60000 The change in revenue is Rs 60000 – Rs 51200 = Rs 800

Hence, the revenue change after the price change and the change in the sold kg of mango is Rs 800. The revenue of the second fruit seller is greater than the first seller.

Comparing and Ordering Numbers

Question 3:

Daniel Is Managing a 1600-Unit Apartment Complex. Currently, 800 Units Are Rented at Rs 3000 per Month. A Market Survey Has Indicated That if He Decreases the Rent by Rs 50 per Month, He Can Give 100 More Units in Rent. If the Maintenance of the Apartment Is Rs 1000 per Month, Then Find a Profitable Deal.

Answer:

Daniel gets Rs 3000 per month as rent for 800 units.
The maintenance of the apartment is Rs 1000.
So, the net income from the 800 units of the apartment is
Rs 3000 – Rs 1000 = Rs 2000

If he decreases the rent by Rs 50 per month, he can give 100 more units in rent.
Now, the rent is
Rs 3000 – Rs 50 = Rs 2950
He can give in rent
800 + 100 units = 900 units
So, now his net income from the 900 units of the apartment is
Rs 2950 – Rs 1000 = Rs 1950

Now, 2000 > 1950
So, the first deal was more profitable.

Question 4:

A City Transit System Carries 2000 Bus Riders per Day for a Fare of Rs 16. A Survey Indicates That the Number of Riders Will Increase by 400 People Every Day if the Fare Is Decreased by Rs 1 the Fare. Now, the Expenses for the Maintenance of the Bus per Day Are Rs 1500. Which Fare Is Less Profitable?

Answer:

The daily net income of the bus when it carries 2000 bus riders each day with a fare of Rs 16 is
2000 × Rs 16 = Rs 32000
The daily profit of the bus, in this case, is
Rs 32000 – Rs 1500 = Rs 30500

If the fare is decreased by Rs 1, then the food is
Rs 16 – Rs 1 = Rs 15
If the number of riders increases by 400, then the number of riders now are
2000 + 400 = 2400

The daily net income of the bus, when it carries 2400 bus riders each day for a fare of Rs 16, is
2400 × Rs 15 = Rs 36000
The daily profit of the bus, in this case, is
Rs 36000 – Rs 1500 = Rs 31000
Rs 31000 > Rs 30500
So, the decreased fare is more profitable for the bus owners.

  • -

    Admission Enquiry

    A Journey To A Better Future Begins With Us