Theme 1 & 2 (Formulas)

Question 1

Market Share?

Answer 1

(Business sales/Total market sales) x 100

Question 2

Price Elasticity of Demand? (PED)

Answer 2

(% change in quantity demanded) / (% change in price)

Question 3

Income Elasticity of Demand? (YED)

Answer 3

(% change in quantity demanded) / (% change in income)

Question 4

Net Cash Flow?

Answer 4

Total Inflows - Total Outflows

Question 5

What is Sales Volume?

Answer 5

Total number of Units sold over a period of time.

Question 6

Sales Revenue?

Answer 6

Number of Units sold x Selling price

Question 7

Total Variable Costs

Answer 7

Number of units sold x Variable cost per unit

Question 8

Total Costs?

Answer 8

Fixed Costs + Variable Costs

Question 9

Contribution per Unit?

Answer 9

Selling price per unit - Variable cost per unit

Question 10

Total Contribution?

Answer 10

Contribution per unit x Number of units sold

Question 11

Break even?

Answer 11

Fixed Costs / Contribution per unit

Question 12

Gross Profit?

Answer 12

Sales Revenue - Variable costs (Direct costs)

Question 13

Operating Profit?

Answer 13

Gross profit - Fixed costs (Indirect costs)

Question 14

Net profit?

Answer 14

Operating profit + or - Bank interest & tax

Question 15

Gross Profit Margin?

Answer 15

(Gross profit / Sales Revenue) x 100

Question 16

Operating Profit Margin?

Answer 16

(Operating Profit / Sales revenue) x 100

Question 17

Net Profit Margin?

Answer 17

(Net Profit / Sales revenue) x 100

Question 18

Current Ratio?

Answer 18

Current Assets / Current Liabilities

Question 19

Acid Test Ratio?

Answer 19

(Current Assets - Stock) / Current Liabilities

Question 20

Labour Productivity?

Answer 20

Output in a period (units) / Number of Employees in that period

Question 21

Capacity Utilisation?

Answer 21

(Actual level of Output / Maximum possible Output) x 100

Question 22

% change?

Answer 22

(Difference between old & new amount / old amount) x 100

Question 23

What is Favourable Variance?

Answer 23

When actual costs are less than budgeted AND/OR when actual sales are more than budgeted.

Question 24

What is Adverse Variance?

Answer 24

When actual costs are more than budgeted AND/OR when actual sales are less than budgeted.