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Business Theme 2 > Theme 2.2 (Knowledge) > Flashcards

Theme 2.2 (Knowledge) Flashcards

1
Q

What is a contingency plan?

A

Plans held in reserve in case things go wrong

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2
Q

What is real income?

A

Changes in household incomes after allowing for changes in price

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3
Q

What is a sales forecast?

A

A method of predicting sales using statistical methods

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4
Q

What are fixed costs?

A

Costs that di not change with output

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5
Q

What are variable costs?

A

Costs that change with output

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6
Q

What is the calculation for sales revenue?

A

Number of units sold x Average selling price

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7
Q

What is a break-even chart?

A

A line graph showing total revenue, total costs and fixed and variable costs

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8
Q

What is the calculation for Contribution?

A

Total revenue - Total variable costs

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9
Q

What is the calculation for Break-even level of output?

A

Fixed costs/ Contribution per unit

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10
Q

What is the calculation for margin of safety?

A

Sales volume - Break even output

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11
Q

What is the calculation for total contribution?

A

Contribution per unit x unit sales

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12
Q

What is the calculation for Contribution per unit?

A

selling price - variable costs per unit

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13
Q

What is adverse variance?

A

A difference between budgets and actual figures that is damaging to the firms profit

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14
Q

What is expenditure budget?

A

setting a maximum figure on what department or manager can spend over a period of time

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15
Q

What is favourable variance?

A

A difference between budgets and actual figures that boosts a firm’s profits

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16
Q

What is an income budget?

A

Setting a minimum wage figure for the revenue to be generated by a product, department or manager

17
Q

What is Zero-budgeting?

A

Setting all future budgets to £0 to force managers to justify spending levels they say they need in the future

18
Q

What is historical budgeting?

A

Basing future budgets on past, historical figures

19
Q

What is extrapolation?

A

Basing forecasts on the continuation of past trends

20
Q

What is a moving average?

A

takes a data series and ‘smoothes’ the fluctuations in the data to show an average

Business Theme 2 (6 decks)

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