Formulas

Question 1

Total Costs

Answer 1

Fixed Costs (FC) + Variable Costs (VC)

Question 2

Current ratio

Answer 2

Current Assets / Current Liabilities

Question 3

Profit

Answer 3

Total revenue - Total costs

Question 4

YED

Answer 4

% change in quantity demanded / % change in income

Question 5

PED

Answer 5

% change in quantity demanded / % change in price

Question 6

Acid test ratio

Answer 6

Current Assets – Stock/Current liabilities

Question 7

Total contribution 2

Answer 7

Total contribution = Total revenue – Total variable costs

Question 8

Variance

Answer 8

Variance = Difference between the actual and the budgeted figure.

Question 9

Net profit margin

Answer 9

(Profit for the year / Sales revenue) x 100

Question 10

Operating profit

Answer 10

Gross profit – fixed costs

Question 11

Gross profit margin

Answer 11

(Gross profit / Sales revenue) x 100

Question 12

Market Growth (%)

Answer 12

(Change / Original) x 100

Question 13

Operating profit margin

Answer 13

(Operating profit/ Sales revenue) x 100

Question 14

Budget Variance

Answer 14

Actual - Budgeted

Question 15

Productivity

Answer 15

Output/Input (e.g. number of employees)

Question 16

Margin of safety

Answer 16

Actual level of goods produced/output – breakeven level of goods produced/output

Question 17

Capacity Utilisation (%)

Answer 17

Actual Output / Maximum Possible Output x 100

Question 18

Contribution per unit

Answer 18

Selling price – variable cost per unit

Question 19

Break-even output

Answer 19

Break even output = fixed costs/contribution per unit

This is shown graphically where total revenue = total costs

Question 20

Gross Profit

Answer 20

Total revenue - variable costs

Question 21

Total revenue

Answer 21

Selling Price per unit x Number of Units sold

Question 22

Total contribution 1

Answer 22

Total contribution = Contribution per unit x units produced or sold

Question 23

Total Variable Costs

Answer 23

Variable Cost per Unit x Number of Units Sold

Question 24

Where the actual revenue is higher than the budgeted revenue, this is a ________ variance.

Where the actual revenue is lower than the budgeted revenue, this is an ________ variance.

Answer 24

Where the actual figure is higher than the budgeted figure, this is a favourable variance.

Where the actual figure is lower than the budgeted figure, this is an adverse variance.

Question 25

Market Share (%)

Answer 25

Sales of one product OR brand OR business / Total sales in that market x 100

Question 26

Monthly Balance (Cash-flow forecasting)

Answer 26

Cash inflow for the month - cash outflow for the month

Question 27

Closing Balance (Cash-flow forecasting)

Answer 27

Opening balance + monthly balance