Business Theme 2 Formulas

Sales Revenue (£)

= No of units sold x selling price

Profit (£)

= Total Revenue – Total Costs

Total Costs (£)

= Fixed Costs + Total Variable Costs

Total Variable Costs (£)

= No of units sold x variable cost per unit

Contribution per unit (£)

= Selling Price (pu) – Variable Cost (pu)

Breakeven Output (units)

= Fixed Costs

Contribution per unit

Margin of Safety (units)

= Current output – Breakeven output

Net Cash (£)

= Total Inflow – Total Outflow

Closing Balance (£) 

= Net Cash + Opening Balance

Total Contribution

= (Selling Price – Var Cost) pu x Units sold

Budget Variance

= Actual – Budgeted

Net (operating) Profit Margin (%)

=      net (operating) profit    x 100

Sales revenue

Gross Profit

Revenue - Cost of Sales 

Operating Profit

Gross Profit - Operating Costs

Labour Productivity (units per worker)

= output per period

Number of employees per period

Capacity Utilisation (%)

=        current output        x 100

Maximum possible output

Unit Cost (£ pu)

= Total Cost

Total Output (units)

Current Ratio

Current Assets

Current Liabilities

Acid Test Ratio

Current Assets – Inventories (Stock)

Current Liabilities