Business Management Summer

Edumentors Business Tutor Flashcards

What is Break Even Quantity?

The number of units a business must sell to cover all its costs (no profit, no loss).

Break Even Formula?

Break-even quantity=Selling Price−Variable Cost per unitFixed Costs​

What is the Margin of Safety?

The number of units sold above the break-even point.

2 reasons businesses use break-even analysis

1. To know how many units to sell to avoid loss.

2. To set targets and control costs.

2 advantages of using break-even analysis

• Helps with planning production levels.

• Shows if a business idea is profitable.

What is Total Revenue?

Total Revenue=Price per unit×Quantity sold

What is Total Contribution?

Total Contribution=Total Revenue−Total Variable Costs

Contribution per unit=Selling Price−Variable Cost

What is Profit?

Profit=Total Revenue−Total Costs

Profit=Total Contribution−Fixed Costs

What is a mission statement?

A short statement of what the business does and its main purpose.

What is a vision statement?

A future goal of the business – what it wants to become.

What are SMART objectives?

S – Specific
M – Measurable
A – Achievable
R – Relevant
T – Time-bound

What is a SWOT analysis?

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

What is added value?

The difference between the selling price and the cost of making a product.

What are the 4 factors of production?

• Land – Natural resources

• Labour – Human effort

• Capital – Tools, machines, buildings

• Enterprise – The entrepreneur who brings the others together