Theme 2

Question 1

Demand

Answer 1

Amount of a product of which a customer is prepared to buy

Question 2

Revenue

Answer 2

Amount (value) of a product that customers are prepared to buy from a firm

Question 3

What is the formula for total revenue

Answer 3

Volume sold
x
Average selling price

Question 4

What are the two ways to increase revenue?

Answer 4

• Increase the quantity sold

- Achieve high selling price

Question 5

Costs

Answer 5

Something a business incurs when making goods and/ or providing services

Question 6

Variable costs

Answer 6

Costs change as output varies

Question 7

Fixed costs

Answer 7

Does not change as output varied

Question 8

Contribution

Answer 8

Total sales - variable costs

Question 9

Contribution per unit

Answer 9

Selling price per unit - VC per unit

Question 10

Total contribution

Answer 10

Contribution per unit x units sold

Question 11

Margin of safety

Answer 11

After break even has been met, the gap in-between this and max profit

Question 12

Break even

Answer 12

Fixed cost/contribution

Question 13

Budget

Answer 13

Financial plan for future concerning revenues and cost of a business

Question 14

Variance analysis

Answer 14

Difference between budget and actual outcome

Question 15

Favourable variance analysis

Answer 15

Better than expected

Question 16

Adverse variance analysis

Answer 16

Worse than expected

Question 17

Fixed costs

Answer 17

Doesn’t change when output varies

Question 18

Semi fixed costs

Answer 18

Fixed in short term but change after certain output varies

Question 19

Profit

Answer 19

Reward for making investments or taking risk

Question 20

Profit in absolute terms

Answer 20

£ value such as £500000

Question 21

Profit in relative terms

Answer 21

Percentage value e.g 10%

Question 22

Gross profit

Answer 22

Revenues - cost of sales

Question 23

Operating profit

Answer 23

Gross profit - expenditures and overheads

Question 24

Profit for year (net profit)

Answer 24

After tax and shareholders taking dividends

Question 25

Current ratio

Answer 25

Current assets / current liabilities

Question 26

What does below 1 on current ratio mean

Answer 26

Low: cash problems

Question 27

What would a ratio 1.5 -2 suggest?

Answer 27

Efficient management of capital

Question 28

Acid test

Answer 28

(Current assets - stocks) / current liabilities

Question 29

What does pestle stand for? (Economic influences)

Answer 29

P - political 
E - economy 
S - social
T - technological 
L - legal
E - ethical

Question 30

What is GDP?

Answer 30

Measure of value output (activity) in the economy

Question 31

What is inflation?

Answer 31

Sustained increase in average price level of an economy and is measured by annual percentage change in level of prices

Question 32

Economic uncertainty and factors examples

Answer 32

Russia war
Covid
Brexit 
Inflation 
Interest rates going up
Cost of living crisis