Business - Unit 2

HideShow resource information

What are start-up costs?

One off costs paid before a new product is introduced e.g advertising

1 of 17

What are running costs?

Costs involved once a new product or service has been launched in order to continue its production e.g rent

2 of 17

What are fixed costs?

Expenditure on items which does not change with the number of items sold or produced e.g rent, loans, mortgage

3 of 17

What are variable costs?

Costs which vary according to the number of items sold or produced e.g raw materials, wages

4 of 17

What are total costs?

Total amount of money spent running a business over a certain period of time

5 of 17

What are operating costs?

Day to day costs e.g wages

6 of 17

What is a liability?

A liability is when a business has not paid debts

7 of 17

What is a Cashflow forcast?

Its a form of budget which shows the inflows and outflows of a business within a certain period of time. It is an important business document.

8 of 17

What are some advantages and disadvantages of a Ca

Advantages:

  • shows financial position based on estimated sales
  • important for applying for a loan

Disadvantages:

  • amount of sales are not reliable
  • the longer the forcast the more unreliable it is
9 of 17

Examples of inflows and outflows

Inflows:

  • sales
  • capital from owners
  • bank loans
  • grants

Outflows:

  • payment to suppliers
  • rent and rates
  • wages and salaries
  • power
  • advertising
10 of 17

What is the formula for total costs?

Fixed Costs + Variable Costs = Total Costs

11 of 17

What is the formula for total revenue?

Quantity Sold x Price = Total Revenue

12 of 17

What is the formula for margin of safety?

Actual Sales - Break Even Output = Margin Of Safety

13 of 17

What is the formula for gross profit margin?

(revenue - costs of goods sold)

------------------------------------------       = gross profit margin

                revenue

14 of 17

What is the formula for net profit?

gross profit - expenses = net profit

15 of 17

What is the formula for working capital?

Current assets - Current liabilities = working capital

16 of 17

What is the formula for break even point?

                   Fixed costs

-------------------------------------------- = break even point

(selling price - variable cost per unit)

17 of 17

Comments

No comments have yet been made

Similar Business resources:

See all Business resources »See all Finance resources »