What is the amount of revenue generated from the sale of goods calculated by multiplying price by quantity in a given period?

• A. Average revenue
• B. Total revenue
• C. Gross profit
• D. Net income

Answer: (B)

Revenue from sales is found by multiplying the price per unit by the quantity sold in the period. This product gives total revenue—the total amount of money the business earns from selling goods during that timeframe. For example, selling 500 units at $12 each yields 6,000 in total revenue.

Average revenue is the revenue per unit (TR divided by quantity), which, in simple cases, equals the price but it’s not the same as the total amount. Gross profit is what remains after subtracting the cost of goods sold from revenue, and net income is what’s left after all expenses are accounted for. So the calculation of price times quantity directly measures total revenue.