equations

Question 1

contribution per unit

Answer 1

= selling price - variable cost per unit

Question 2

total contribution (2)

Answer 2

= contribution per unit x units sold

= total revenue - total variable costs

Question 3

break even output

Answer 3

= fixed costs / contribution per unit

Question 4

margin of safety

Answer 4

= actual level of output - break even level of output

Question 5

unit costs

Answer 5

= total costs / number of units of output

Question 6

gross profit

Answer 6

= revenue - cost of sales

Question 7

operating profit

Answer 7

= gross profit - operating expenses

Question 8

profit for the year

Answer 8

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

Question 9

gross profit margin (%)

Answer 9

= gross profit / revenue x 100

Question 10

operating profit margin (%)

Answer 10

= operating profit / revenue x 100

Question 11

profit for year margin (%)

Answer 11

= profit for year / revenue x 100

Question 12

variance

Answer 12

= budgeted figure - actual figure

Question 13

labour turnover (%)

Answer 13

= no of staff leaving / no of staff employed by the business x 100

Question 14

employee retention rate for particular time period (%)

Answer 14

= no of employees who remained with the business for the whole period of time / no of employees at start time of period x 100

Question 15

labour cost per unit

Answer 15

= labour costs / units of output

Question 16

return on capital employed (%)

Answer 16

= operating profit / total equity + non current liabilities x 100

Question 17

current ratio

Answer 17

= current assets / current liabilities

Question 18

gearing (%)

Answer 18

= non current liabilities / total equity + non current liabilities x 100

Question 19

payables days

Answer 19

= payables / cost of sales x 365

Question 20

receivables days

Answer 20

= receivables / revenue x 365

Question 21

inventory turnover

Answer 21

= cost of sales / average inventories held