formulae

Question 1

revenue (sales or turnover) =

Answer 1

revenue = selling price per unit X number of units sold

Question 2

variable costs (total variable costs)

Answer 2

Total variable costs = variable cost per unit X number of units sold

Question 3

total costs

Answer 3

total costs = fixed costs + variable costs

Question 4

profit

Answer 4

profit = total revenue - total costs

OR

profit = total contribution - fixed costs

Question 5

market capitalisation of a business =

Answer 5

market cap = number of issued shares x current share price

Question 6

expected value of decision with 2 outcomes

Answer 6

(pay off of A x probability of A ) + (pay off of B x probability of B)

Question 7

net gain

Answer 7

net gain = expected value - initial cost of decision

Question 8

market growth %

Answer 8

market growth %= change in size of market over a period / original size of the market x 100

Question 9

market share %

Answer 9

market share % = sales of one product or business / total sales in market x 100

Question 10

added value

Answer 10

added value = sales revenue - costs of bought in goods and services

Question 11

labour productivity

Answer 11

labour productivity = output over a time period / number of employees

Question 12

unit costs (average costs)

Answer 12

unit costs = total costs / number of units of output

Question 13

capacity utilisation (%)

Answer 13

cap util = actual output / maximum possible output

Question 14

return on investment %

Answer 14

return on inv= profit from investment/ cost of investment x 100

Question 15

Gross profit

Answer 15

gross profit = revenue - cost of sales

Question 16

profit from operations

Answer 16

profit from operations = gross profit - operating expenses

Question 17

profit for the year

Answer 17

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

Question 18

gross profit margin %

Answer 18

gross profit margin % = gross profit / revenue x 100

Question 19

profit from operations margin %

Answer 19

profit from operations margin % = operating profit / revenue x 100

Question 20

profit for the year margin %

Answer 20

profit for the year margin % = profit for the year / revenue x 100

Question 21

variance

Answer 21

variance = budgeted figure - actual figure

Question 22

contribution per unit

Answer 22

contribution per unit = selling price - variable costs per unit

Question 23

total contribution =

Answer 23

total contribution =
contribution per unit x Units sold

or

total contribution =
total revenue - total variable costs

Question 24

break evan output =

Answer 24

break even output =

fixed costs / contribution per unit

Question 25

margin of safety

Answer 25

margin of safety = actual level of output - break even level of output

Question 26

labour turnover %

Answer 26

labour turnover % = number of staff leaving / number of staff employed x 100

Question 27

employee retention rate % for period of time

Answer 27

number of employees who remained for the whole time period / number of employees at the start of the time period x 100

Question 28

employee costs as a percentage of turnover

Answer 28

employee costs / turnover x 100

Question 29

labour cost per unit

Answer 29

labour costs per unit = labour costs / units of output