2.2

Question 1

Consumer trends

Answer 1

Habits or behaviours of those involved in the use of goods and services

Question 2

Economic Uncertainty

Answer 2

Firms or consumers are unable to predict the future sales, incomes and costs

Question 3

Sales Forcast

Answer 3

Prediction of expected levels of sales volume or revenue for a business for a future period

Question 4

Average Cost

Answer 4

Cost of producing one unit

Question 5

Fixed costs

Answer 5

Costs that do not change with output

Question 6

Revenue

Answer 6

Amount of income for a business generated from sales

Question 7

Variable costs

Answer 7

Costs that vary according to the level of output

Question 8

Break even

Answer 8

The level of output where total revenue is equal to total costs

Question 9

Margin of Safety

Answer 9

Difference between the current or planned level of output of sales and the break even level of output

Question 10

Adverse Variance

Answer 10

Negative variance where where higher costs that budget

Question 11

Favourable Variance

Answer 11

Positive variance where costs are lower than budget

Question 12

Budgets

Answer 12

A financial plan of income and expenditure prepared in advance

Question 13

Historical Budgets

Answer 13

A budget based upon previous financial figures

Question 14

Zero based budgets

Answer 14

Type of budget where no money is allocated for spending unless it has been justified first

Question 15

Variance Analysis

Answer 15

Shows the difference between budgeted and actual figures and can be calculated at end of financial period once actual figures are known