Business Theme 2 Equations Flashcards
Total revenue
Sales price x quantity
Total variable costs
Variable cost per unit x quantity
Total costs
Total variable costs + total fixed costs
Net cash flow
Inflows - outflows
Opening balance
Closing balance from previous month
Closing balance
Opening balance that month + net cash flow
Contribution per unit
Sales price - variable cost per unit
Break even output
Total fixed costs / contribution per unit (expressed as the number of units i.e output NOT as a monetary amount)
Total contribution
Contribution per unit x quantity
Margin of safety
Actual/forecast output - break even output
Profit
Total revenue - total OR
Total contribution - total fixed costs OR
Margin of safety x contribution per unit
Variance
Actual figures - budgeted figures
Think about whether the actual are better than the budgeted or worse, if better ‘favourable’ if worse ‘adverse’
Profit margin
Profit/ revenue x 100 profit margin %
Gross profit
Revenue - cost of sales
Operating profit
Revenue - cost of sales and operating expenses
