2.2

Question 1

Sales forecasting

Answer 1

predicting future sales using past data or market data

Question 2

Correlation

Answer 2

relationship between 2 variables

Question 3

Extrapolation

Answer 3

marketing predictions based around trends

Question 4

Moving averages

Answer 4

smooth out fluctuations in data

Question 5

Profit formula

Answer 5

revenue - total costs

Question 6

Revenue formula

Answer 6

selling price x quantity sold

Question 7

total costs formula

Answer 7

fixed costs + variable costs

Question 8

Whats the difference between variable and fixed costs?

variable costs formula

Answer 8

Fixed costs dont change depending on output, whilst variables costs do change

Variable cost per unit x quantity sold

Question 9

What is break even

Answer 9

When a business makes neither a profit or a loss (revenue=total costs)

Question 10

How do you calculate margin of safety

Answer 10

actual sales or output - break even output

Question 11

how do you calculate contribution and contribution per unit

Answer 11

Contribution = total sales - total variable costs

contribution per unit = selling price - variable cost per unit

Question 12

How do you calculate break even output

Answer 12

fixed costs/contribution per unit

Question 13

What is a budget and what are the 3 types

Answer 13

A financial target
- revenue
-expenditure/costs
-profit

Question 14

What are the two ways of creating a budget

Answer 14

Historical budget= based on previous years data

Zer based budget= making budgets from scratch

Question 15

What is variance analysis and how do you calculate it

Answer 15

comparing actual results to the budget

actual - budgeted

Question 16

What are the 2 types of variance

Answer 16

Favourable = actual is more than budgeted
for revenue and profit, its a good thing if they are favourable

Adverse = actual is less than budgeted
for costs, its a good thing if they are adverse

Question 17

factors affecting sales forecasting

Answer 17

• consumer trends
• economic variables
• actions of competitors

Question 18

difficulties with sales forecasting

Answer 18

• market can be dynamic
• requires updating
• accuracy is less accurate for long time periods
• forecast only as good as data put on it

Question 19

what is contribution

Answer 19

difference between selling price and variable costs per unit. Its used to pay for fixed costs and then provide profits