MBA - KEY TERMS

Question 1

Formula for sales revenue

Answer 1

Price x Quantity

Question 2

Formula for total cost

Answer 2

Fixed cost + Variable cost

Question 3

Formula for variable cost

Answer 3

Total cost - Fixed costs

Question 4

Formula for profit

Answer 4

Total revenue - Total costs

Question 5

Formula for contribution per unit

Answer 5

Selling price - Variable costs

Question 6

Formula for break even using TR

Answer 6

TR = TC

Question 7

Formula for break even using contribution

Answer 7

Total sales / (FC - SP)

Question 8

Formula for margin of safety

Answer 8

Actual output - Break even output

Question 9

Formula for net cash flow

Answer 9

Cash inflow - Cash outflow

Question 10

Formula for opening balance

Answer 10

Closing balance of the previous month

Question 11

Formula for closing balance

Answer 11

Net cash flow + Opening balance

Question 12

Formula for percentage change

Answer 12

Original / Difference x 100

Question 13

Formula for revenue variance

Answer 13

Actual revenue - Budget revenue

Question 14

Formula for cost variance

Answer 14

Actual costs - Budget costs

Question 15

Formula for profit variance

Answer 15

Actual profit - Budget profit

Question 16

Formula for unfavourable variance

- Revenue - Costs

Answer 16

• Brev > Arev
• Acost > Bcost

Question 17

Formula for favourable variance

- Revenue - Costs - Profit

Answer 17

• Arev > Brev
• Bcost > Acost
• Aprofit > Bprofit

Question 18

Formula for gross profit

Answer 18

Total revenue - Cost of sales

Question 19

Formula for operating profit

Answer 19

Gross profit - Overheads

Question 20

Formula for net profit

Answer 20

Operating profit - Tax and Interest

Question 21

Formula for gross profit margin

Answer 21

Gross profit / Total revenue x 100

Question 22

Formula for operating margin

Answer 22

Operating profit / Total revenue x 100

Question 23

Formula for net profit margin

Answer 23

Net profit / Total revenue x 100