# AMAZING Formula Revision List; Business Studies AS Level (Finance)

A brilliant list i found online which summarises an enormous amount of complex formulas - very useful for business studies students, great for revision.

- Created by: Love will never leave us alone..
- Created on: 03-04-12 10:50

First 407 words of the document:

Formula list for

AS Business Studies

Essential Formulas

Percentages

Percentage change = (new old) / old x 100 or difference / old x 100 where old is the previous

value and new is the current value.

Example: calculate the percentage increase if sales revenue increases from £120m to £150m.

Percentage increase in sales revenue = (150120)/120 x 100 = 30/120 x 100 = 0.25 x 100 = 25%

Revenue

Revenue: income earned from selling products. Sometimes called sales, sales revenue or turnover.

Total revenue is found by multiplying selling price per item by the quantity (amount) of items sold.

Revenue = price x quantity or TR = P x Q where TR is total revenue, P is price and Q is quantity

Example: calculate total revenue if 2,000 items priced £30 each are sold. TR = £30 x 2,000 = £60,000

Total cost, fixed cost and variable cost

Costs: the expenses involved in making a product. Firms incur costs by trading.

Total Costs (TC): the amount of money spent by a firm on producing a given level of output. Total

costs are made up of fixed costs (FC) and variable costs (VC).

Fixed costs: expenses of production that do not change with output eg rent. Fixed costs are almost

always indirect costs and are sometimes called overheads.

Variable costs: expenses of production that do change with output eg components and raw materials.

Variable costs are almost always direct costs.

Total costs = Fixed Costs + Variable Costs or TC = FC + VC. This means FC = TC VC and VC = TC FC

Example: calculate total costs if fixed costs are £10,000 and variable costs are £40,000.

TC = FC + VC = £10,000 + £40,000 = £50,000

Average cost and variable cost per unit

Average cost (AC) or unit cost is the cost of producing one item. Average cost is found by dividing

total costs (TC) by total output (Q).

Average costs = Total Cost / Output or AC = TC/Q

Example: calculate unit cost if the total cost of making 2,000 products is £50,000.

AC = TC/Q = £50,000/2,000 = £25. The unit or average cost of making one product is £25.

Variable cost per unit or average variable cost (AVC): the cost of making one item ignoring fixed

costs and is found by dividing variable cost by the level of output. AVC = VC / Q

Example: calculate unit variable cost if variable cost of making 2,000 products is £40,000.

AVC = VC/Q = £40,000/2,000 = £20. The unit variable cost of making one item is £20.

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