Break Even Analysis, Desicion Making, Cash Budgets And Income Statement

Question 1

Profit =

Answer 1

Sales revenue-costs=profit

Question 2

What is break even?

Answer 2

Break even is when the revenue(sales) matches the cost of the business making neither a lift nor profit

Question 3

Total costs=

Answer 3

Fixed costs + Variable costs

Question 4

Sales revenue =

Answer 4

Units sold x Selling price

Question 5

Profit/loss=

Answer 5

Sales revenue - Total cost

Question 6

What is break even analysis

Answer 6

Break even analysis is working out how many items you have to sell in order to break even

Question 7

If you do not reach the break even point, you make …

Answer 7

A loss

Question 8

If you go beyond the break even point, you make …

Answer 8

Profit

Question 9

What are the two types of costs

Answer 9

Fixed costs

Variable costs

Question 10

What are fixed costs

Answer 10

… are not influenced by the number of products you make (“output”)

Question 11

Example of fixed costs

Answer 11

Rent

Question 12

What is variable costs

Answer 12

… are influenced by the number of products you make

Question 13

Example of variable cost

Answer 13

The more of a product you make, the more you will pay for the materials

Question 14

Break even point=

Answer 14

Fixed cost
——————————————————
(Selling price per unit-variable cost per unit)

Question 15

What is decision making

Answer 15

… is choosing one option from a range of options

Question 16

What are the 3 types of decision making

Answer 16

Strategic
Tactical
Operational

Question 17

What are strategic decision

Answer 17

… are long term decision that effect the overall direction of the company. They are made by managers at the heights level in the organisation

Question 18

What are tactical decisions

Answer 18

… are medium term decision that are taken to halo achieve the strategic decision. They are made by senior and occasionally middle managers

Question 19

What are operational decisions

Answer 19

… are short term decision that are taken on a day-to-day basis. They are made by low level managers or supervisors

Question 20

Example of strategic decision

Answer 20

Becoming a world wide business

Question 21

Example of tactical decision

Answer 21

Opening more stores

Question 22

Example of operational decision

Answer 22

Who will be working during the week

Question 23

What is a cash budget

Answer 23

… is a prediction of cash flowing in and out of the business. It does not tell a business about its profitability

Question 24

What is an income statement

Answer 24

… are produced to tell the organisation if they have made a profit or loss

Question 25

What are the two types of income statement

Answer 25

Trading account

Profit and loss account