Business Formulas

What is the formula for sales revenue?

• Price x Profit

• Price x Quantity sold

• Price / Costs

• Price - Total costs

Answer explanation

Revenue is all the money that comes in from the sales of a product or service

What is the formula for total costs?

• Fixed Costs - Variable costs

• Revenue - cost of sales

• Fixed costs + Variable costs

• Fixed costs + Total costs

Answer explanation

Remeber, fixed costs do not change with output, but variable costs do.

Good examples of fixed costs are rent and salaries

Good examples of variable costs are raw materials and packaging.

What is the formula for Break Even?

• Opening balance + Net cash flow

• Price x Quantity

• Gross profit - expenses

• Fixed cost / (sales price - variable cost per unit)

Answer explanation

Remember, break even is where the business does not make either a loss or a profit.

What is the formula for Margin of Safety

• Actual sales - Break even sales

• Price x Quantity

• Gross profit / Sales revenue

• Total fixed costs + Total variable costs

Answer explanation

Think about this as how many extra sales did they get over the break even point.

What is the formula for Gross Profit

• Total fixed costs = Total variable costs

• Gross profit - Expenses

• Price x Quantity

• Sales revenue - Cost of sales

Answer explanation

Cost of sales are all of the costs associated with making the product/service

What is the formula for Net Profit

• Gross profit / Sales revenue x 100

• Gross profit - Expenses

• Price x Quantity

• Sales revenue - Cost of sales

Answer explanation

Expenses are similar to fixed costs, these are costs that are not directly related to making the product/service but still have to be paid.

What is the formula for% increase or decrease?

• ((Difference in increase or decrease)/ original ) * 100

• Gross profit - Expenses

• (Net profit / Sales revenue) x 100

• sales revenue - cost of sales

Answer explanation

Percentage change is a really important skill in GCSE Business Studies, it is important that you learn this formula.

Sheila sells shin pads. She sells them for £10 per pair. This week she sold 25 pairs of shin pads. What was her total revenue for this week?

Answer explanation

Remember, selling price x quantity sold is the formula for revenue.

Sheila has fixed costs for the week which total £100. It costs her £4 to make each pair of shin pads. This week she made 10 pairs of shinpads. What were her total costs for this week?

Answer explanation

Remember this formula is fixed costs + variable costs.

Sheila has decided to put her prices up, from £15 to £18. What is the percentage increase in the selling price of her shin pads?

Answer explanation

Difference/ original x 100