Formulas

Question 1

Total Cost=

Answer 1

Fixed costs + Variable costs

Question 2

Profit=

Answer 2

Total revenue - Total costs
or
Total contribution - Fixed cots

Question 3

Total variable costs=

Answer 3

Variable cost per unit X No’ of units sold

Question 4

Sales revenue or turnover=

Answer 4

Selling price per unit X No’ of units sold

Question 5

Market capitalisation=

Answer 5

No’ of issued shares X Current share price

Question 6

In a decision tree, Net Gain=

Answer 6

Expected value - Initial cost of decision

Question 7

Market size volume (definition)

Answer 7

the quantity of goods and services produced in a particular market over a period of time

Question 8

Market size value (definition)

Answer 8

the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time

Question 9

sales volume (definition)

Answer 9

the quantity of goods and services produced by a particular business over a period of time

Question 10

sales value (definition)

Answer 10

the total sales revenue of a particular business over a period of time

Question 11

Market Growth (%)

Answer 11

change in market size / original market size
X 100

Question 12

Sales growth (%)

Answer 12

change in sales / original sales X 100

Question 13

Market share (%)

Answer 13

sales of one product OR brand OR business / total sales in the market X 100

Question 14

PED

Answer 14

% change in quantity demanded / % change in price X 100

Question 15

price inelastic ranges from..

Answer 15

-1 < inelastic < 0

Question 16

price elastic ranges from..

Answer 16

-∞ < elastic < -1

Question 17

added value=

Answer 17

sales revenue- costs of bought-in goods

Question 18

labour productivity=

Answer 18

output per employee / No’ of employees

Question 19

unit costs=

Answer 19

TC of production/ No’ of units produced

Question 20

capacity utilisation (%)

Answer 20

actual output / maximum possible output X 100

Question 21

ROI (%)

Answer 21

return on investment / cost of investment X 100

Question 22

Gross profit=

Answer 22

sales revenue - cost of sales

Question 23

Operating profit=

Answer 23

gross profit - operating expenses

Question 24

profit for the year=

Answer 24

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

Question 25

variance (definition), favourable, adverse

Answer 25

the difference between an actual and a budget figure.
Favourable variance results in profits being higher than forecast.
Adverse variance results in profits being lower than forecast.

Question 26

contribution per unit=

Answer 26

selling price - variable cost per unit

Question 27

total contribution=

Answer 27

contribution per unit X units sold
OR
total revenue - total variable costs

Question 28

Break-even output=

Answer 28

fixed costs / contribution per unit

Question 29

break even output on chart is where,

Answer 29

total revenue = total costs

Question 30

break even profit on chart is where,

Answer 30

vertical distance between total revenue line and total cost line

Question 31

margin of safety=

Answer 31

actual level of output - breakeven level of output

Question 32

gross profit margin (%)

Answer 32

gross profit / sales revenue X 100

Question 33

operating profit margin (%)

Answer 33

operating profit / sales revenue X 100

Question 34

profit for the year margin (%)

Answer 34

profit for the year / sales revenue X 100

Question 35

Labour turnover (%)

Answer 35

No’ of staff leaving / average No’ of staff employed X 100

Question 36

employee retention (%)

Answer 36

No’ of staff leaving / average No’ of staff employed X 100