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Btec Business > Unit 2 > Flashcards

Unit 2 Flashcards

1
Q

What is Meant by Start-Up Cost

A

Costs you have when setting up a business e.g. painting, decorating, equipment, fixtures and fittings

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2
Q

What are Operating Costs

A

Costs you have on a day to day basis with the business-Stock,Wages,Salaries,Rent,Utilities,Broadband

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3
Q

What are Fixed Costs

A

These cost do not change with output
For example these costs will remain the same if you sell 0 items or 1000 items.

A business has to pay rent on their building each month, regardless of if any customers actually use the business

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4
Q

What are Variable Costs

A

hese are costs that do change with output

For example if you sell more items, then your cost will increase as a result

If it costs 2p to buy each can of cola from your supplier, then if you sell more cans of cola your costs will start to increase

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5
Q

What are Direct costs

A

Costs directly related to the production process

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6
Q

What are Indirect Costs

A

Costs that can not be directly related to the production process

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7
Q

What is the Equation for Total Costs

A

TOTAL COSTS = FIXED COSTS + VARIABLE COSTS

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8
Q

What is Revenue

A

A business will generate revenue from the selling of products or services(Selling Price x NO items sold)

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9
Q

What is the Equation for Revenue

A

Selling Price x NO items sold

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10
Q

What are the 3 types of Revenue

A

Sales revenue
Interest revenue
Loan revenue

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11
Q

What is Expenditure

A

anything that the business has to pay out

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12
Q

What are Overhead Costs

A

the everyday running costs of an organisation

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13
Q

How do you calculate Profit

A

To calculate profit we need to know the revenue and expenditure of an organization
Profit=Revenue - costs

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14
Q

What is Break Even

A

The point where a revenue and costs are equal

A new business may view break even as an achievement as it could be difficult to attract new customers at first. It may need to reduce prices to achieve sales

An existing business may view break even as failure, if it has made a profit in previous years. They may have shareholders expecting payment

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15
Q

What does The Breakeven Chart help with

A

How many items it needs to sell to break even
Predict future profits
Impact change in costs/revenue has
Decisions that may need to be made

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16
Q

Equation For Breakeven

A

Break even = Fixed costs/(Selling Price - Variable Cost)

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17
Q

What is the impact of on the break even point if
The selling price were to increase

A

If the selling price were to increase the business should break even quicker as it wont need to sell as many units

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18
Q

What is the impact of on the break even point if
What if variable costs were to increase?

A

The business would take longer to break even as it would need to sell more units

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19
Q

What is budgeting?

A

A plan of inflows and outflows in an organization

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20
Q

Expenditure Budget

A

This is the budget that looks at all the costs

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21
Q

Revenue budget

A

Money that inflows into the enterprise

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22
Q

Favourable

A

if you do better than budget

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23
Q

Adverse

A

worse than budget

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24
Q

Why do you budget?

A

Purpose
Budgeting allows the enterprise to
Assess how it is performing
Make divisions about performance
Identify areas of weakness
Plan use of finances

25
Q

What is Budgetary control

A

This is the process where the actual performance of an organisation are compared to budgeted performance

26
Q

What Is gross Profit

A

This is the largest profit that a business makes(Revenue - cost of sales
The profit made from selling a product after the cost of sales has been deducted

27
Q

What is Net profit

A

The smaller profit an enterprise makes(Revenue - all costs, Gross profit- expenditure)
The profit made from selling a product after all the costs have been deducted

28
Q

What are the two things an enterprise can do if they are making a loss at the gross profit stage

A

Reduce costs of sales
Increase selling price(be mindful of competition)

29
Q

If an enterprise is making a loss at net profit stage, then it has two options……

A

Increase gross profit
Reduce overhead costs

30
Q

What is a Cash Flow Forecast

A

This is a prediction of the inflows and outflows of money in an organisation

31
Q

What are 3 examples of inflows

A

Sales revenue
Personal Savings
Interest
Bank loans are also inflow but are bad as you must pay interest

32
Q

What are 3 examples of outflows

A

Purchases
Wages
Bills
Loan repayments

33
Q

What happens if a business has too many costs

A

If the business has to many costs then the cash flow level will drop, potentially causing a liquidity problem

34
Q

What are the two potential ways to solve a cash flow problem

A

Increase selling price/ Sales revenue
Reduce Costs(Fixed or variable)

35
Q

Why are bank loans not a potential way to solve a cash flow problem

A

bank loans is not a solution as you just pay interest

36
Q

What are the Benefits of cash flow forecast

A

Plan future investment in new resources
Make decisions new products/services
Plan for future borrowing requirements
Plan for changes in capacity

37
Q

What is meant by Credit sales

A

Some businesses will give their customers credit. This means that they don’t have to pay immediately for their items

38
Q

Overall what does a cash flow forecast ensure?

A

A enterprise can plan for future borrowing
A business can adjust future spending
Invest any surplus money

39
Q

What are assets

A

Assets are what you own

40
Q

What are liabilities

A

Liabilities are what you owe

41
Q

What are some examples of Assets

A

Stock
Cash
Trade receivables(Debtors
Machinery
Buildings
Reputation

42
Q

What ar some examples of liabilities

A

Creditors
Bank Loan
OverDraft(Short term loan)

43
Q

What are the 4 P’s

A

Price
Place
Product
Promotion

44
Q

What is the promotional Mix

A

This is an aspect of the marketing mix and describes the blend of promotional activities that an organisation can undertake to achieve its promotional goals

45
Q

What is advertising

A

The use of paid for space to communicate products in prime media with the purpose to persuade and inform

46
Q

Name examples of moving image advertising

A

Tv, Cinema, DVD, Youtube

47
Q

Name examples of Print advertising

A

Newspaper, Billboards,Magazines,Direct Mail,Press releases

48
Q

Name examples of ambient advertising

A

Promotional merchandise, buses, taxis, Trains

49
Q

Name examples of digital advertising

A

SMS, Podcasts, blogs, Banners, Social Media

50
Q

Name examples of audio advertising

A

Radio, Podcasts

51
Q

What does a sales promotion do

A

This provides incentives to the customer with the purpose of stimulating demand for a product or service

52
Q

List examples of Price promotion

A

Coupons
Competitions
Money refunds
Loyalty Incentives

52
Q

What is meant by Personal Selling

A

This is the interpersonal interaction between the organisation and the customer to bring about a sale. Typically this is done by the sales functional area

53
Q

List examples of personal selling

A

Face to face
Telephone
Email
Video/Web conferencing

53
Q

What is meant by
Public Relations

A

This is the promotion of an organisation or brand through placing information in the media without paying for the time or media space directly

54
Q

Name examples of PR

A

Press releases
Sponsorship
Exhibitions

55
Q

What is meant by Direct Marketing

A

This is the building of a relationship on an individual level between the business and customer

56
Q

List examples of Direct Marketing

A

Direct Mail (Junk Mail)
Mail Order Catalogues
Telemarketing

57
Q

What is meant by Brand personality

A

The characteristics or qualities that a consumer can relate to a specific brand

Btec Business (1 decks)

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