Distinction BTEC Business Unit (Finance Unit)
With Complete Solutions
Graded A+
QUESTIONS AND ANSWERS
What are Running Costs? ANSWER -The things a business pays for on a regular basis.
What are Fixed Costs? ANSWER -Costs that do not change no matter what.
What are Variable Costs? ANSWER -Costs that can change depending on how much stock
is sold/output levels
Formula of Variable costs? ANSWER -Variable cost per unit x number made/sold =
Variable costs
What are Direct Costs? ANSWER -Expenses that directly relate to making a product
What are Indirect Costs? ANSWER -Costs that can't be directly related to making a
product
What are Total Costs? ANSWER -All of the businesses costs added together.
Formula for total costs? ANSWER -Fixed costs + variable costs = total costs
OR
Indirect costs + direct costs = total costs
What is Revenue? ANSWER -All the money that the business receives.
Formula for revenue? ANSWER -number of sales x price per unit = revenue
What is Expenditure? ANSWER -What the business spends.
, What are Overheads? ANSWER -The everyday running costs of the business.
What is Profit? ANSWER -When revenue is greater than expenditure
What is Loss? ANSWER -When expenditure is greater than revenue
What is the Break-even point? ANSWER -When the amount of money spent on making a
product is the same as the money made selling the product. Therefore the business has
neither made a profit or a loss.
What is the Margin of safety? ANSWER -The difference between the target or actual sales
and the break-even point.
How would the break-even point change if fixed costs increase? ANSWER -The break-
even point would be higher.
How would the break-even point change if fixed costs decrease? ANSWER -The break-
even point would be higher.
How would the beak-even point change if sales prices increase? ANSWER -The break even
point would be lower.
How would the break-even point change if the sales price decrease? ANSWER -The break-
even point would be higher.
What does break-even analysis help the business with? ANSWER -Deciding how much the
business should sell it's products for and help decide whether the costs are too high.
What do budgets do? ANSWER -Predict or limit how much money the business is going
to spend and predict how much they will receive.
What does an expenditure budget do? ANSWER -Predict how much money a business will
spend over a period of time.
With Complete Solutions
Graded A+
QUESTIONS AND ANSWERS
What are Running Costs? ANSWER -The things a business pays for on a regular basis.
What are Fixed Costs? ANSWER -Costs that do not change no matter what.
What are Variable Costs? ANSWER -Costs that can change depending on how much stock
is sold/output levels
Formula of Variable costs? ANSWER -Variable cost per unit x number made/sold =
Variable costs
What are Direct Costs? ANSWER -Expenses that directly relate to making a product
What are Indirect Costs? ANSWER -Costs that can't be directly related to making a
product
What are Total Costs? ANSWER -All of the businesses costs added together.
Formula for total costs? ANSWER -Fixed costs + variable costs = total costs
OR
Indirect costs + direct costs = total costs
What is Revenue? ANSWER -All the money that the business receives.
Formula for revenue? ANSWER -number of sales x price per unit = revenue
What is Expenditure? ANSWER -What the business spends.
, What are Overheads? ANSWER -The everyday running costs of the business.
What is Profit? ANSWER -When revenue is greater than expenditure
What is Loss? ANSWER -When expenditure is greater than revenue
What is the Break-even point? ANSWER -When the amount of money spent on making a
product is the same as the money made selling the product. Therefore the business has
neither made a profit or a loss.
What is the Margin of safety? ANSWER -The difference between the target or actual sales
and the break-even point.
How would the break-even point change if fixed costs increase? ANSWER -The break-
even point would be higher.
How would the break-even point change if fixed costs decrease? ANSWER -The break-
even point would be higher.
How would the beak-even point change if sales prices increase? ANSWER -The break even
point would be lower.
How would the break-even point change if the sales price decrease? ANSWER -The break-
even point would be higher.
What does break-even analysis help the business with? ANSWER -Deciding how much the
business should sell it's products for and help decide whether the costs are too high.
What do budgets do? ANSWER -Predict or limit how much money the business is going
to spend and predict how much they will receive.
What does an expenditure budget do? ANSWER -Predict how much money a business will
spend over a period of time.
