3.5.1 Setting financial objectives and 3.5.2

Question 1

What is revenue for a business

Answer 1

results from trading activities

Question 2

revenue calculation

Answer 2

Total Revenue=

PRICE X QUANTITY

Question 3

Total revenue can also be called

Answer 3

income
revenue
turnover
sales
sales revenue
sales turnover

Question 4

Question-
If the selling price is £8 and 5 items are sold, what is the total revenue

Answer 4

£40

Question 5

Question-
If the total revenue is £60 and the quantity sold is 10 units, what is the selling price

Answer 5

£6

Question 6

What are costs

Answer 6

the expenditure a firm makes as a part of trading

Question 7

Examples of costs

Answer 7

wages
electricity
marketing
raw materials
machinery
salaries

Question 8

What are fixed costs

Answer 8

Costs that do not change directly with the level of output

Question 9

What are variable costs

Answer 9

costs that change directly with output

they will increase by a set amount each time a new unit is made

Question 10

Which type of costs are variable

Answer 10

raw materials
bought-in stocks
wages based on hours worked or amount produced

Question 11

Which type of costs are fixed

Answer 11

rent and rates
salaries
advertising
insurance, banking and legal fees
software research and developmnent

Question 12

What is an example of a semi-variable cost

Answer 12

utilities

Question 13

How do you calculate total costs

Answer 13

total fixed costs + total variable costs

Question 14

How do you calculate total variable costs

Answer 14

variable costs by unit x number of units

Question 15

What are unit costs

Answer 15

the cost of producing one unit of output

unit cost = Total cost
————–
units of output

Question 16

What is profit

Answer 16

surplus achieved when total revenue from sales is higher than the total costs of a business

the money that is left from sales once all costs have been paid

Question 17

What is the calculation for profit

Answer 17

total rev - total costs

Question 18

Question-
If a bar has a rev of £10,500 a week and total costs of £5400. What would be its profit

Answer 18

£10,500 - £54000 = £5100

Question 19

What is loss

Answer 19

shortfall suffered when total revenue from sales is lower than the total costs of a buisness

Question 20

What is gross profit

Answer 20

the amount of profit left after the cost of producing the goods or service is taken away from the sales rev

Question 21

What is the calculation for gross profit

Answer 21

sales rev - cost of goods sold

Question 22

Question
Calculate the total rev for shelly’s ice cream

Sold 360 ice creams at £1.50, 140 lollies at £1.20 and 270 drinks at £1.10

Answer 22

260 x £1.50= £390

140 x £1.20 =168

270 x £1.10 = 297

total = £855

Question 23

What is operating profit

Answer 23

the profit left after all fixed and variable costs have been deducted from revenue

Question 24

Calculation of operating profit

Answer 24

Gross- operating expenses

Question 25

What is profit for the year

Answer 25

the profit once all costs have been paid

operating profit
profit from other activities
-net finance costs
-tax

Question 26

What are revenue objectives

Answer 26

Most businesses set revenue objectives

most relating to-
revenue growth
sales maximisation
marketing share

Question 27

What are cost objectives

Answer 27

cost minimisation is a common cost objective-

particularly in relation to controlling the fixed costs of a business

a business might also set objectives relating to unit costs

Question 28

What are profit objectives

Answer 28

specific level of profit
rate of profitability (as a % of revenue)
profit maximisation

Question 29

What is return on investment

Answer 29

a measure of the efficiency of an investment in financial terms, used to compare the financial returns of alternative investments

Question 30

What is the calculation of return on investment

Answer 30

return on investment
——————————- X 100
cost of the investment

Question 31

Question

Is a new advertising campaign better than the purchase of delivery vehicles

the advertsiing campaign costs £400,000
provides return of £32,000 once costs have been taken out

the new delivery vehicles cost £350,000
provides a return of £30,000 once costs have been taken out

Answer 31

32000
———– x 100. = 8%
400,000

30,000
———— x 100. = 8.57%
350,000