Key term definitions 2.2 Flashcards
what is the definition of consumer income?
the amount of income remaining after taxes and expenses have been deducted from wages
what is the definition of consumer trends?
the habits or behaviours of consumers that determine the goods and services they buy
what is the definition of economic growth?
the rise in output of an economy as measured by the growth in Gross Domestic Product GDP
what is the definition of economic variables?
measures within the economy which have effects on business and consumers (unemployment, inflation, exchange rates)
what is the definition of extrapolation?
forecasting future trends based on past data
what is the definition of forecasting?
a business process assessing the probable outcome using assumptions about the future
what is the definition of sales forecast?
projection of future sales revenue often based on previous sales data
what is the definition of time series data?
a method that allows a business yo predict future levels from past figures
what is the definition of average cost or unit cost?
FORMULA
the cost of producing 1 unit.
total cost/(divide by)output
what is the definition of fixed cost?
a cost that does not change as a result of a change in output in the short run
what is the definition of long run?
the time period where all factors of production are variable
what is the definition of profit?
FORMULA
the difference between total costs and total revenue. it can be negative
total cost - total revenue=profit
what is the definition of sales revenue?
FORMULA
the value of output sold in a particular time period
price X quantity of output
what is the definition of sales volume?
the quantity of output sold in a particular time period
what is the definition of semi-variable cost?
a cost that consists of both fixed and variable elements
what is the definition of short run?
the time period where at least 1 factor of production is fixed
what is the definition of total cost?
the entire cost of producing a given level of output
what is the definition of total revenue?
the amount of money the business receives from selling output
what is the definition of variable cost?
a cost that rises as output rises
what is the definition of break-even?
when a business generates just enough revenue to cover its total costs
what is the definition of break-even chart?
a graph containing the total cost and total revenue lines illustrating the break-even output
what is the definition of break-even output?
the output a business needs to produce so that its total revenue and total costs are the same
what is the definition of break-even point?
the point at which total revenue ans total costs are the same
what is the definition of contribution?
the amount of money left over after variable costs have been subtracted from revenue. the money contributes towards fixed costs and profit
what is the definition of margin and safety?
the range of output between the break-even level and the current level of output over which a profit is made
what is the definition of budget?
a quantitative economic plan prepared and agreed in advance
what is the definition of budgetary control?
a business system that involves making future plans comparing the actual results with the planned results and then investigating the causes of any differences
what is the definition of historical figures?
quantitative information based on past trading records
what is the definition of production cost budget?
a firm’s planned production costs for a future period of time
what is the definition of sales budget?
a firm’s planned sales for a future period of time-can be measured in terms of volume or revenue
what is the definition of variance?
the difference between actual financial outcomes and those budgeted
what is the definition of variance analysis?
the process of calculating variances and attempting to identify their causes
what is the definition of zero-based budgeting or zero budgeting?
a system of budgeting where no money is allocated for costs or spending unless they can be justified by the fundholder (given zero value)
