Formulas

Question 1

Revenue

Answer 1

price x quantity

Question 2

Total variable cost (TVC)

Answer 2

VC per unit x quantity

Question 3

Total cost (TC)

Answer 3

Total variable cost + fixed cost

Question 4

Average cost (AC)

Answer 4

Total cost / quantity

Question 5

Break even (BE)

Answer 5

FC/selling price-VC per unit(average variable cost)

Question 6

Contribution per unit

Answer 6

selling price-VC per unit

Question 7

Margin of safety (MOS)

Answer 7

actual sales-BE quantity

Question 8

Target profit quantity

Answer 8

(FC + target profit)/contribution per unit

Question 9

Target price

Answer 9

average fixed costs+ average variable costs
or
(Total fixed costs/output) + average variable cost

Question 10

Cost of sales (production)

Answer 10

raw materials + direct labour

Question 11

Cost of sales (retail)

Answer 11

Opening stock + purchases - closing stock

Question 12

Gross profit

Answer 12

sales revenue - cost of sales

Question 13

net profit before interest and tax

Answer 13

Gross profit - expenses

Question 14

Net profit

Answer 14

Net profit before tax - tax

Question 15

Working capital

Answer 15

current assets - current liabilities

Question 16

Net assets

Answer 16

Total assets - Total liabilities
or
(Fixed assets + current assets) - (Long term liabilities + current liabilities)

Question 17

Annual depreciation (straight-line method)

Answer 17

(Purchase cost - Residual value)/ useful life span

Question 18

Depreciation

Answer 18

Net book value x Depreciation value

Question 19

Capital employed

Answer 19

Loan capital + Share capital + Accumulated retained profits
or
Long-term liabilities + Share capital + Accumulated retained profits

Question 20

Net cash flow

Answer 20

Cash inflows - Cash outflows

Question 21

Closing balance

Answer 21

Opening balance + Net cash flow

Question 22

Opening balance

Answer 22

Closing balance from the previous month

Question 23

Payback period (PBP)

Answer 23

Cost of Investment/ Contribution per month