Unit 2 Definitions

Question 1

Delegated budget

Answer 1

A budget given to a specific manager to control

Question 2

Variance

Answer 2

The difference between a budgeted and an actual figure

Question 3

Favourable variance

Answer 3

A change from a budgeted figure that leads to higher than expected profits

Question 4

Adverse variance

Answer 4

A change from a budgeted figure that leads to lower than expected profits

Question 5

Creditors

Answer 5

Suppliers owed money by the business

Question 6

Credit control

Answer 6

The monitoring of debts to ensure credit periods are not exceeded

Question 7

Bad debt

Answer 7

Unpaid customer bills that are unlikely to ever be paid

Question 8

Over trading

Answer 8

Expanding a business rapidly without obtaining the necessary finance so cash flow problems are acquired

Question 9

Profit margin

Answer 9

Profit made as a proportion of sales revenue

Question 10

Gross profit

Answer 10

Sales revenue - variable costs

Question 11

Net profit

Answer 11

Sales revenue - total costs

Question 12

Return on capital (& equation)

Answer 12

The proportion of capital invested that is net profit (%)

Net profit/capital invested x 100

Question 13

Organisational structure

Answer 13

The way jobs, responsibilities and power are organised within a business

Question 14

Organisational chart

Answer 14

A diagram showing job titles, lines of communication and responsibility within a business

Question 15

Levels of hierarchy

Answer 15

The number of levels of management in an organisation

Question 16

Chain of command

Answer 16

The lines of authority in a business

Question 17

Span of control

Answer 17

The number of subordinates one job holder is responsible for

Question 18

Work load

Answer 18

How much work one employee/department has to complete within a gives time period

Question 19

Job role

Answer 19

The tasks involved in a particular job

Question 20

Delegations

Answer 20

The passing down of authority to make specific decisions

Question 21

Communication flow

Answer 21

How information is passed around an organisation

Question 22

Workforce performance

Answer 22

Methods of measuring the effectiveness of employees including labour productivity, staff turnover and absenteeism

Question 23

Labour turnover

Answer 23

Percentage of total workforce who leave in a given time period

Question 24

Labour productivity (& equation)

Answer 24

The output per employee over a given time period

Total output in given period/number of employees

Question 25

Absenteeism

Answer 25

Number of working days lost as a result of employees absence from work

Question 26

Recruitment and selection process

Answer 26

How a business chooses the best candidate for a job role

Question 27

Job description

Answer 27

A summary of the main duties associated with a job

Question 28

Internal recruitment

Answer 28

Candidates selected from inside the organisation

Question 29

External recruitment

Answer 29

Candidates are selected from outside the organisation

Question 30

Training

Answer 30

Giving employees the knowledge, skills and techniques necessary for the job

Question 31

Induction training

Answer 31

An initial preparation upon taking up a post

Question 32

Off-the-job training

Answer 32

Training away from the place of work e.g. Training centre

Question 33

On-job-training

Answer 33

Learning by doing the job

Question 34

Motivation

Answer 34

Factors that inspire employees to complete tasks at work

Question 35

Job design

Answer 35

Changing the nature of a job role in order to increase motivation or reduce dissatisfaction at work

Question 36

Expenditure budget

Answer 36

A plan of the future expenses of a business

Question 37

Job rotation

Answer 37

Varying an employees job on a regular basis

Question 38

Job enlargement

Answer 38

Expanding the number of tasks completed by an employee

Question 39

Job enrichment

Answer 39

Increase the level of responsibility within a job to make work more challenging and rewarding

Question 40

Operational targets

Answer 40

These are specific and usually measurable objectives set for each operations activity of a business

Question 41

Capacity

Answer 41

The maximum output that a firm can produce with existing resources

Question 42

Capacity utilisation (& equation)

Answer 42

The proportion of full capacity that is current output Current output/maximum output x 100

Question 43

Unit cost

Answer 43

Average cost of unit per output Total costs/output

Question 44

Excess capacity

Answer 44

When a business has greater production capacity than is likely to be used in the near future

Question 45

Overtime

Answer 45

Staff working beyond their contracted hours in exchange for a higher hourly wage

Question 46

Temporary staff

Answer 46

Workers employed for a fixed period of time after which the employment contract may not be renewed

Question 47

Part-time staff

Answer 47

Workers employed on a less than full weekly hours contract

Question 48

Sub contracting

Answer 48

Using a supplier to manufacture part/all of a firms product or service

Question 49

Rationalisation

Answer 49

Reorganising resources to cut costs

Question 50

Quality product

Answer 50

A product that meets or exceeds customer expectations

Question 51

Quality standards

Answer 51

The expectations of customers expressed in terms of the minimum acceptable production pr service standards

Question 52

Quality control

Answer 52

Based on inspection of the product/sample of products

Question 53

Quality assurance

Answer 53

A system of agreeing and meeting quality standards at each stage of production

Question 54

Total quality management (TQM)

Answer 54

An approach to quality that aims to involve all employees in the quality improvement process

Question 55

Internal customers

Answer 55

People within the organisation who depend on the quality of work being done by others

Question 56

Supplier relationships

Answer 56

Links with the companies that supply a business with goods & services

Question 57

Information technology

Answer 57

The use of electronic technology to gather, store, process and communicate information

Question 58

Supply chain

Answer 58

All of the stages in the production process from obtaining raw materials to selling to the consumer, from point of origin to point of consumption