Business Management Formulas Paper 2
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18 Terms
Unit contribution Formula
Price - Average variable cost
Total contribution Formula
(Price - Average variable cost) x Quantity
Break-even quantity Formula
Fixed costs ÷ Price - Variable Costs
Margin of safety formula
Level of output demanded - Break-even quantity
Total cost formula
Total fixed costs + total variable costs
Profit formula
total revenue - total costs
total revenue formula
selling price x quantity
total cost formula
total fixed cost + total variable costs
Target profit quantity formula
(Fixed cost + Target profit) ÷ (Price – Average Variable Cost)
Target price formula
(Target profit + Total cost) ÷ Quantity of output
Target profit formula
Target total revenue – Target total cost
Reorder quantity formula
Maximum stock level – Minimum stock level or buffer stock
Usage rate per time period formula
Stocks used ÷ Time period
Capacity utilization rate formula
(Actual output per period ÷ Full capacity output per period) × 100
Defect rate formula
(Defected output ÷ Total output) × 100
Labour productivity formula
Total output ÷ Total labour input
Capital productivity (output per machine hour) formula
Total output ÷ Machine hours
Operating Leverage formula
Quantity (Selling price per unit – Variable cost per unit) ÷ Quantity (Selling price per unit – Variable cost per unit) – Fixed costs