Actual Outcome or Income – Budgeted Outcome or Income FAVOURABLE Variance = good for the business, this means that the actual figures are better than the budgeted figure. This is only for income figures. However, if the figures are higher than the budget for output (eg. Costs) then the variance is ADVERSE ADVERSE Variance = bad for the business, this means that the figures are lower than the budgeted income, therefore losses occur. However, if the actual outcome costs is lower than the budgeted outcome costs, the variance is FAVOURABLE Eg.  Shown as: £ BudgetActualVariance Sales Revenue Product sales£7000£8000Favourable – higher than expected Costs Wages£3500£4000Adverse – higher than expected Rent£1500£1000Favourable – lower than expected

 The percentage return made on sales.  E.g:  Shown as: % Profit Sales X 100 Sales£150 Net Profit£30 Net Profit Margin = % X 100

 Its basically profit.  Total Sales – Total costs OR  Contribution – Fixed Costs  E.g: Total sales = 6000 Total costs = 2000 Total sales – costs= =£4000 profit  Shown as: £ Sales (incomes)£6000 Wages (outcomes)£1500 Electricity (outcomes)£500

RETURN Profit On= ____over____ X 100 CAPITALMoney invested  Return on capital is the percentage return on investments  E.g:  Shown as: % Net Profit£200 Capital (money invested)£2500 Return on Capital = % X 100=0.08

Gross Profit Turnover (sales)  It shows the percentage profit left from the selling price after the cost of the goods that have been sold have been taken off  Shown as: % X 100

 Sales revenue – cost of goods sold  Shown as: £

 Current Assets – Current Liabilities  Shown as: £

 Cash Inflows – Cash Outflows Eg:  Shown as £ (inflows) 25 – (outflows) 20=5

Total output No. of workers  Productivity is how to indicate efficiency  This shows the output per person in a given time.  Shown as: Output in units

 This shows the percentage of staff leaving a business in a year Number of staff leaving Number of staff  E.g: In 2010, the average number of employees at a business was 40. The number of employees leaving the business during the year was 4. What was the labour turnover? =4 40  Shown as: % X 100 X100 = 10%

Current output Maximum output  The proportion of capacity currently being used.  How efficient the business is being, for example, are they using all their machinery to produce as much products as they could be? E.g:  Shown as % X 100 Current outputMaximum OutputCapacity Utilisation % % (4550/9100 x100) 1.5 Million2 Million75% ( / x100)

Number of unauthorised absences Total days worked  This shows the percentage of days employees take unauthorised absences from work.  E.g. Calculators Direct makes calculators. In 2010, their average number of employees was days of absence was recorded and on average, each employee worked 300 days per annum. Calculate the absenteeism rate. = 3900 (300 x 105)  Shown as: % X 100 You do this to work out the total days worked by all employees. (300 days worked X 105 employees) X 100 = 12.4%

% change in demand Price Elasticity of Demand (PED) % change in Price  To work out % change in demand, you thing of Cheese and Onion, C stands for Change, O stands for Original so you work out the = CHANGE Change over original ORIGINAL  E.g: If sales in 2013 were £80 million and in 2014, sales were £90 million. What is the change in demand?  USE CHEESE AND ONION!  work out the change (90-80=10)  Original = 80  Shown as: % for change in demand or price Unit for PED They can’t ask you a question about this but you can use it in your answers about demand/price. X X 100 = 12.5%

 To work out % change in price, you use Cheese and Onion again  E.g: If the price of a product was £10 in 2013, and in 2014 the price was £7, what is the % change in price? 3 10  Shown as % X 100 = 30%

 To work out the PED coefficient: use the triangle  % change in demand  % change in price Eg. Using the answers from the previous slides: You must MOVE THE DECIMAL POINT ONE PLACE to get the %! = 4% INCREASE in DEMAND  Shown as : % = 0.4… This isn’t the answer.