paper 2 Flashcards
what are fixed costs and give an example
cost that is the same no matter how much is produced
eg. rent
what are variable costs
costs that rise as output rises
what is total costs
entire cost of producing a given level of output
what is breakeven
generating enough money to cover total costs
TC = TR
what is a historical budget
when previous years budget is used, slightly adjusted for inflation
what is zero based budgeting
start with budget of 0 , and department must justify why it needs that sum of money.
what is margin of safety
range of output between break even level and current level of output over which a profit is made.
(knowing how much sales can fall before a loss is made)
what is working capital
amount money needed to pay for day to day trading of business
what is liquidity
ease at which assets can be converted to cash
what is a non-current asset and give example
long term resources used repeatedly
eg. land / machinery
what is a current asset and give example
assets change into cash within 12 months
eg. stock
what is productivity and what does it measure
rate of production
measures: output per worker
________________
time period
what is production
transforming resources into useful goods
what is a decision tree
method of tracing the alternative outcome of any decision
what is payback period
amount of time takes for project to recover or repay initial outlay
