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Edexcel Theme 2
Financial Formula
Term | Definition |
---|---|
Total Revenue | Quantity Sold X Selling Price |
Total Cost | Fixed Costs + Variable Costs |
Fixed Costs | Costs that do not change with output |
Variable Costs | Costs that change with output |
Profit/Loss | Total Revenue - Total Costs |
Contribution (per unit) | Price - Variable Cost per unit |
Total Contribution | Total Revenue - TOTAL Variable Cost |
Breakeven | Total Revenue = Total Cost |
Breakeven Formula | Fixed Costs ÷ (Price - Variable Cost per unit) |
Margin of Safety | Output - Breakeven output |
Gross Profit Margin | (Gross Profit ÷ Revenue) X100% |
Operating Profit Margin | (Operating Profit ÷ Revenue) X 100% |
Net Profit Margin | (Net Profit ÷ Revenue) X 100% |
Breakeven (Contribution Formula) | Fixed Cost ÷ Contribution per unit |
Gross Profit | Revenue - Cost of Sales |
Operating Profit | Gross Profit - Other Expenses |
Net Profit | Operating Profit - Interest |