Formulas

Question 1

Total Costs

Answer 1

Fixed Costs + Variable Costs

Question 2

Profit

Answer 2

Total Revenue - Total Costs

OR

Total Contribution - Fixed Costs

Question 3

Variable Costs

Answer 3

Variable cost per unit × Number of units sold

Question 4

Total Revenue

Answer 4

Selling price per unit × Number of units sold

Question 5

Market Capitalisation

Answer 5

Number of issued shares × Current share price

Question 6

Expected value of a decision with two possible outcomes - A & B

Answer 6

Pay-off of A × probability of A + Pay-off of B × probability of B

N.B. Probability of A + Probability of B = 1.0

Question 7

In a decision tree Net gain

Answer 7

Expected value - Initial cost of decision

Question 8

Market size - volume

Answer 8

is the quantity of goods and services produced in a

particular market over a period of time usually one year .

Question 9

Market Size value

Answer 9

Isthe total sales revenue generated from selling all of the

goods and services produced in a particular market over a period of time

usually one year .

Question 10

Sales Volume

Answer 10

is the quantity of goods and services produced by a particular

business over a period of time usually one year .

Question 11

Sales value

Answer 11

is the total sales revenue of a particular business over a period of

time usually one year .

Question 12

Market growth % in year’X’

Answer 12

Change in the size of the market between year X-1 and year X

Size of the market in year (X-1) × 100

Question 13

Sales growth % in year’X’

Answer 13

Change in sales of product or business between year X-1 and year X

Sales of product or business in year (X-1) × 100

Question 14

Market share %

Answer 14

Sales of one product OR brand OR business

Total sales in the market × 100

Question 15

Price elasticity of demand

Answer 15

Percentage change in quantity demand

Percentage change price

Question 16

Added value value added

Answer 16

Sales revenue-costs of bought-in goods and services.

Question 17

Labour productivity

Answer 17

Output per time period

Number of employees

Question 18

Unit costs average costs

Answer 18

Total costs of production

Number of units of output produced

Question 19

Capacity utilisation %

Answer 19

Actual output in a given time period

Maximum possible output in a given time period

× 100

Question 20

Return on investment %

Answer 20

Return on investment (£)

Cost of the investment (£)

×100

Question 21

Gross Profit

Answer 21

Sales Revenue - Cost of Sales

Question 22

Profit from Operations

Answer 22

Sales Revenue - Cost of Sales - Operating Expenses

Question 23

Profit for year

Answer 23

Operating profit + Profit from other activities - Net finance costs -Tax

Question 24

Variance

Answer 24

The difference between an actual and a budgeted figure.

Question 25

Contribution per unit

Answer 25

Selling price - Variable costs per unit

Question 26

Total contribution

Answer 26

Contribution per unit × Units produced or sold OR Total revenue - Total variable costs

Question 27

Break-even output

Answer 27

_Fixed costs_ Contribution per unit

Question 28

Margin of safety

Answer 28

Actual level of output - Breakeven level of output

Question 29

Gross profit margin %

Answer 29

_Gross profit_ Sales revenue × 100

Question 30

Operating profit margin

Answer 30

_Operating profit_ Sales revenue × 100

Question 31

Profit for year margin

Answer 31

_Profit for year_ Sales revenue × 100

Question 32

Labour turnover

Answer 32

_Number of staff leaving during the year_ Average number of staff employed by the business during the year

Question 33

Employee retention rate % for a particular time period

Answer 33

_Number of employees at end of period-number of leavers_ Number of employees at end of period ×100

Question 34

Employee costs as percentage of turnover

Answer 34

_Employee costs_ Sales turnover × 100

Question 35

Labour cost per unit

Answer 35

_Labour costs_ Units of output

Question 36

Return on capital employed ROCE %

Answer 36

_Operating profit_ Total equity + non-current liabilities × 100