Which of the following formulas correctly calculates revenue per unit sold?

• A. Revenue per unit sold = Net Sales \times Number of units sold
• B. Revenue per unit sold = Gross Profit \div Number of units sold
• C. Revenue per unit sold = Net Sales \div Number of units sold
• D. Revenue per unit sold = Net Income \div Number of units sold

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of revenue per unit sold. Revenue per unit sold is the amount of revenue generated for each unit of product sold. It is calculated by dividing the total revenue (Net Sales) by the number of units sold.
2. Step 2: Analyze the given formulas. The first formula, 'Revenue per unit sold = Net Sales × Number of units sold,' is incorrect because multiplying Net Sales by the number of units sold would give a total revenue much larger than the actual revenue per unit.
3. Step 3: Evaluate the second formula, 'Revenue per unit sold = Gross Profit ÷ Number of units sold.' This formula is incorrect because Gross Profit represents the difference between Net Sales and Cost of Goods Sold, not the revenue per unit.
4. Step 4: Assess the third formula, 'Revenue per unit sold = Net Sales ÷ Number of units sold.' This formula is correct because dividing Net Sales by the number of units sold provides the revenue generated per unit.
5. Step 5: Review the fourth formula, 'Revenue per unit sold = Net Income ÷ Number of units sold.' This formula is incorrect because Net Income accounts for all expenses, taxes, and other deductions, not just the revenue per unit sold.