BUSS2 Calculations

AQA Business Studies AS

Numerical Revision Sheet

Unit 2 – Managing a Business 

1)    Variance = budget - actual

Favourable  variance  =      Actual revenue greater than budget

                                      Actual costs less than budget

Adverse variance   =          Actual revenue less than budget

                                      Actual costs greater than budget    

 Complete the following table:

	Budget (000s)	Actual (000s)	Variance (000s)	F or A
Sales income	400	441
Capital costs	56	88
Raw materials	100	106
Marketing expenditure	42	55
Wages	84	74
Other costs	40	40
Total expenditure
Profit

2)    Measuring profitability

Net profit margin =             Net profit               

                                      -------------     x 100

                                        Sales

Return on capital =              Net profit              

                                      -------------    x 100

                                      Capital invested

Calculate the net profit margins and return on capital employed for the following 3 businesses to 1 decimal place. 

	Xyz ltd	Abc ltd	Rutc ltd
Sales revenue	£140000	£90000	£230000
Net Profit	£17000	£18000	£35000
Capital invested	£340000	£270000	£280000

3)    Measuring the effectiveness of the workforce

Labour productivity  =                Output per period

                                              ------------------------

                                             Number of employees per period

Labour turnover =                   Number of employees leaving   

                                           ----------------------------------    x 100

                                          Average no. of employees

Annual rate of absenteeism = Total number of days lost due to absence

                                       ----------------------------------------    x 100

                                          Total number of days worked

Annual rate of lost days due = Number of days lost due to H&S issues

to health and safety (H&S)            ---------------------------------- x 100

                                                Total number of days worked

	2005	2006	2007
Total output (units)	12600	13500	14960
Average no. of employees	200	180	170
No. of employees leaving	15	20	25
No. of working days for each employee per year	250	250	250
Total no. of days lost due to absence	1200	1440	1700
Total no. of days lost to health and safety reasons	30	20	12

Calculate using the above table the productivity rate, labour turnover, absenteeism levels and the health and safety rate for each of the 3 years to 2 decimal places.

4) Capacity utilisation =                 Actual output

                                                 --------------------    x 100

                                             Maximum possible output

     Unit cost =                                   Total cost

                                                      ---------------

                                                     Units of output

	Maximum capacity output	Actual units of production	Capacity utilisation %	Total Costs (£)	Unit Costs (£)
Factory A	6000	4500		270000
Factory B	6000	2700		216000
Factory C	8000	4800		336000
Total	20000	12000		822000

Complete this table.

5) Price elasticity of demand – measures the price sensitivity of a product. The responsiveness of a change in the quantity demanded of a product to a change in price.

 Price elastic products will be greater than 1

 Price inelastic products will be less than 1

	Original sales level	New Sales level	Original price (£)	New Price (£)
Product A	10000		£1.00	£1.05
Product B	15000		£15.00	£16.50
Product C	18000		£3.00	£2.50

PED A:  0.5

PED B:  1.5

PED C: 0.75

Using the price elasticity figures above calculate the new sales level

BUSS2 Revision 'Analysis and Evaluation'



This question was worth 13 marks, 5 of which were for evaluation.

Rob believes that an effective recruitment and selection system is the essential factor to improve the future performance of his workforce. Do you agree with him? Justify your view.

The text for this question is in the previous blog entry. Press 'BUSS2 Revision' if it is not visible above.

Possible lines of analysis:

There are many chains of argument that may be used. Some examples are:

Recruiting the right people is vital to maintain the quality of a company’s products and especially when the company is growing rapidly.
 ↓
Employees with the right skills can help to improve productivity and quality levels improving the company’s performance.

Training is one way of improving the skills of a workforce to improve productivity levels and to enhance the profitability of the enterprise.
↓
Similarly, training would be essential for a quality assurance system.

Employing temporary workers can assist a company in managing seasonal demand for its products.
↓
Additional employees can be employed at busy times allowing increased production levels and minimising waiting times for customers.

Writers, such as Taylor, advocate the use of pay to improve motivation and the performance of the workforce.
↓
Higher pay rates may result in higher rates of
productivity.

Now evaluation?
Looking at this picture, which apple would you choose?

Evaluation is about making a judgement. Why did you choose the red apple?

In answering the large mark questions in BUSS2 you are required to make a judgement, not about choosing an apple, but around a business theme.

The theme above is whether you agree that an effective recruitment and selection system is the essential factor to improve the future performance of his workforce.

Ideas for Evaluation might include the following:

My judgement is…..

 It is unlikely that there is one essential factor to improve the workforce’s performance

– instead it is likely to be a combination of factors such as training and recruitment and selection.

 It depends how the performance of the workforce is to be measured: labour productivity or turnover. Labour productivity fell in 2010 so perhaps training should be a priority.

If reducing labour turnover is a concern then recruitment and selection will be crucial in appointing the ‘right’ people.

Please feel free to leave a comment below.