exam topics

Question 1

what is the formula for sales revenue?

Answer 1

price x quantity sold

Question 2

what is the formula for total costs?

Answer 2

fixed costs + variable costs

Question 3

what is revenue variance?

Answer 3

actual revenue - budgeted revenue

Question 4

what is cost variance?

Answer 4

actual cost - budgeted cost

Question 5

what is job production?

Answer 5

when bespoke products are made to fit consumer needs and wants

Question 6

what is flow production?

Answer 6

when identical items are produced in an assembly line

Question 7

advantage and disadvantage of job production

Answer 7

✅you can charge a premium price
✅you can meet consumers needs/wants
❌ there are high Labour costs
❌time consuming

Question 8

advantage and disadvantage of flow production

Answer 8

✅very efficient because of machinery
✅higher productivity because it is capital intensive
❌high start up costs of buying the machinery
❌if one machine breaks, the whole assembly line is delayed

Question 9

what is batch production?

Answer 9

when products are made identically and are then modified to adjust the businesses’ needs, for example, differentiation of logos, colours, or sizes

Question 10

advantages and disadvantages of batch production

Answer 10

✅ flexible as you slightly alter the end process
✅benefit from economies of scale
❌can be demotivating for workers
❌higher storage costs

Question 11

what is a bank loan?

Answer 11

money borrowed from the bank

Question 12

advantage and disadvantage of bank loan

Answer 12

✅ can get large sums of money quickly
✅can negotiate the amount of money that can be loaned
❌have to pay it back within a year (for short term loans)
❌the owner may have to offer collateral to secure it (assets if they don’t pay back in time)

Question 13

what is an overdraft?

Answer 13

when you go into the negatives and the business lends you money until you have the income to pay it back

Question 14

advantage and disadvantage of overdraft

Answer 14

✅leaves you to be more flexible
✅you have more working capital day to day
❌bank can ask for repayment at any time, and interest rates are high

Question 15

what is crowdfunding?

Answer 15

when a business wants to start a project and asks large amounts of people to invest small sums of money into it

Question 16

advantage and disadvantage of crowd funding

Answer 16

✅cheap and easy to set up
✅don’t have to pay anything back
❌you might not get enough money

Question 17

what is the formula for labour productivity?

Answer 17

output/number of workers

Question 18

how can you improve productivity?

Answer 18

• increasing capital (investment in machinery)
• motivating workers
• train workers to improve workforce - also for them to be specialist staff

Question 19

what are some issues of increasing labour productivity?

Answer 19

• focusing on high levels of output can affect the overall quality of performance (customer service)
• more mistakes are more likely to occur, which could cost the business more

Question 20

what are some benefits to increasing labour productivity?

Answer 20

• improves the competitiveness of the business as cost per unit is reduced
• with lower cost per unit, the business can then make higher profit margins or even giving their customers a more competitive price

Question 21

what are benefits to increasing capital?

Answer 21

• the business is more efficient
• don’t have to spend as much on wages
• machinery works 24hrs a day- increased productivity

Question 22

what are downfalls to increasing capital?

Answer 22

• the initial start up costs are high

- if machinery breaks, it can slow down production

Question 23

what is quality assurance?

Answer 23

when you rely on the workers to maintain the quality of the business throughout production

Question 24

what is quality control?

Answer 24

when you use inspections to upkeep quality

Question 25

what is gross profit margin (calc)

Answer 25

gross profit/revenue x 100

Question 26

what is gross profit? and give the formula after

Answer 26

profit made after direct costs have been met, the formula is revenue - cost of sales

Question 27

how can you increase gross profit margin?

Answer 27

- by raising revenue by increasing price | - cutting the cost of sales (by finding a cheaper supplier)

Question 28

what does gross profit margin tell you?

Answer 28

the gross profit made on sales/revenue

Question 29

what is net profit? give the formula too

Answer 29

profit made from the business for the year, the formula is operating profit - tax

Question 30

what is lean production?

Answer 30

production carried out to eliminate waste, like over production, waiting time, transportation time etc. this is through using JIT

Question 31

what is just in time?

Answer 31

when you order stock just in time for it to be used

Question 32

what is an advantage and disadvantage of just in time

Answer 32

- it can reduce storage costs - however, it is more risky as any delays on transportation can put the business at risk of not having enough stock to sell

Question 33

what is inflation?

Answer 33

the rise in general prices

Question 34

what is hyperinflation?

Answer 34

when inflation goes above 50%

Question 35

what are some advantages of holding stock?

Answer 35

- you are always prepared for sudden surges in demand

Question 36

what are disadvantages of holding stock?

Answer 36

- products can get damaged or lost | - storing the products is expensive

Question 37

how does inflation/hyperinflation affect a business?

Answer 37

- consumers would have less disposable income, and therefore businesses would be put at a disadvantage as consumers would be less likely to buy luxuries

Question 38

what is market orientated mean?

Answer 38

when you focus on consumer wants and need rather than the products wants and needs