BTEC Business Unit 3: C, D, E & F - Business Finance Exam With Complete Solution 2024

BTEC Business Unit 3: C, D, E & F - Business Finance Exam With Complete Solution 2024Running Costs - correct answer-Items a business pays for on a regular basis. Fixed Costs - correct answer-Costs that remain constant even if output changes Variable Costs - correct answer-Costs that change depending on production levels Formula of Variable costs - correct answer-cost per unit x number made = Direct Costs - correct answer-Expenses that directly relate to making a product Indirect Costs - correct answer-Costs not directly related to production levels Formula for TOTAL COSTS - correct answer-Fixed costs + variable costs = OR Indirect costs + direct costs = Formula for revenue - correct answer-number of sales x price per unit = Expenditure - correct answer-What the business spends. Overheads - correct answer-Costs that cannot be linkeddirectly to production, e.g stationary Break-even point - correct answer-When money spent on making a product is the same as the money made selling the product. Margin of safety - correct answer-The difference between the actual (or predicted) sales and the break-even point. How would the break-even point change if fixed costs increase? - correct answer-The break-even point would be higher. How would the beak-even point change if sales prices increase? - correct answer-The break even point would be lower. break-even analysis helps business to... - correct answer-calculate sales level needed in order to be viable; evidence for a banl loan; write a buiness plan Budgets purpose - correct answer-Set the amount of finance to be spent on, e.g. marketing. Reduces risk of business overspending Budgetary control - correct answer-budgeted figures are compared with the actual figures. Ways to improve cash flow? - correct answer-- Encourage customers to pay with cash. - Encourage customers to pay straight away. - Get a credit period from suppliers. - Sell extra stock. Cash Inflow examples - correct answer-- Sales of products - Sales of assets - Interest on savings - Receipt of bank loan Cash Outflow examples - correct answer-- Payments for stock/raw materials - Wages and bills - Loan repayments Cash Deficit - correct answer-When the business does not have enough money to cover its outflows. Cash surplus - correct answer-When a business might have extra money in their account that could be used better e.g to grow Seasonal products - correct answer-Certain products that sell better at specific time of the year, e.g Halloween Advantages of cash flow forecasts - correct answer-- Predicting problems - Planning for success - Decision making Risks of not completing a cash flow forecast - correct answer-- Won't be able to tell if the business can pay it's bill or not. - The business won't know if they need an overdraft or to reduce outflow. - If a business cannot pay it's suppliers then products may not be delivered. - Production may stop and the business may go into liquidation Cost of Goods Sold (CoGS) - correct answer-Cost of producing a product. Formula for gross profit - correct answer-revenue - COGS = Net profit definiton - correct answer-Profit left over once all costs have been subtracted. Formula for net profit - correct answer-gross profit - expenditures (or overheads