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Question	Answer
What is the equation for profit	P= S- C profit= total sales income/revenue- total cost
What is the equation for sales income (S) ?	S= sQ Sales income=sales price * quantity
What is the equation for total variable cost (CV)?	CV= cvQ Total variable cost= cost per unit* quantity
Profit depends on the sales, what is an equation relating sales and profit?	P=sQ- cvQ-Cf profit= salesquantity-cost per unitquantity- fixed costs.
What are the equations for loss?	L=-P (Loss is the negative of profit) L= Cf-(s-cv)Q Loss= fixed costs- (sales price-cost per unit)quantity
What is the equation for loss with no sales?	L= L(0)=Cf
The value of change of loss with quantity	dL/dQ=-(s-cv) (s-cv)= contribution made by unit quantity. sales price- cost per unit
Breaking even equations	P= (s-cv)Qo- Cf=0 profit= (sales price-cost per unit) initial quantity- fixed cost (s-cv)Qo= Cf
Break even quantity (Qo) is equalled to?	Qo= Cf/s-cv ratio of total fixed costs (£) to contribution (£/unit)
Break even selling price for a given quantity.	So= Cf/Q + cv break even selling price= fixed cost/quantity + cost per unit)
Weekly profit formulae?	P=S- cv- Cf or P=(s-cv)Q- Cf. profit = contribution* quantity- fixed costs
Total absorption cost formula (Cta)	Cta(Q)= C/Q= Cf +CvQ/Q= Cf/Q + Cv
Profit margin formulae	P= S-C= sQ-cvQ-Cf P(Q)= P/Q=s-cv-Cf/Q
Percentage profit margin	P* = P/cv+ Cf/Q P= p* x(cv+ Cf/Q)
Selling price at a fixed percentage profit margin.	s= (cv + Cf/Q) (1+ p*)
Selling price at a given profit margin	St= (1+rt)s= (cv+ Cf/Q)(1+p*) (1=rt)
Manager's Top priorities	1. Safety 2. Personnel 3. Money 4. Communications 5.Talking to the media 6. Technical aspects 7. Quality assurance 8. Training and professional development 9. Information storage and renewal 10. The day to day mechanics of management.
Direct costs	* A price that can be completely attributed to the production of specific goods or services, e.g. materials, labour and expenses related to the production of the product.
Indirect costs.	Difficult to assign to a specific product e.g. depreciation/ administrative expenses
Overhead	refers to all ongoing business expenses not including or related to direct labour, direct materials or third party expenses that are billed directly to customers. e.g rent, heating, lighting, HQ and personnel
FIFO Advantages and disadvantages.	* Straight forward to apply. * Goods are valued at the price they were brought. *At time of high inflation it will give an over optimistic impression of profits being made, since costs will be apparently lower.
FIFO definition.	Assets produced or acquired first are sold, used or disposed of.
LIFO advantages and disadvantages.	* Few advantages. * If stockpile not cleared out completely, fairly regularly manufacturing might benefit from an essentially arbitrary bonus in the form of a very low price.
LIFO	assets acquired last are the ones sold used or disposed of first.
Replacement cost	* Here the current cost is what stores will be charged in the open market to replace good being taken out by the manufacturing centre.
What is Replacement cost sometimes referred to as?	NIFO- next in first out.
Effect of replacement costing on value of stock.	The rationale of this method means that stock should be revalued at their replacement costs a practice followed by oil companies. In times of high inflation the replacement cost is higher than the historic cost (original nominal monetary value of the product) and reevaluation profit will be declared by the company
Average cost.	* Is a way to smooth out fluctuations in price
Standard cost	*Based on a long term average cost and some judgement where the market price is likely to be over the year.
Allocation of overheads. Fractional allocation	* Overhead charges should be broken down into a number of catagories, rent personnel, materials HQ staff etc. *If production centre one takes up 23% of factory space it should pay 23% of rent/space charge.
Fixed cost.	* A cost that does not change with an increase or decrease in amount of goods or services produced.
Variable cost.	* a cooperate expense that varies with production output, rise as production icnreases, and fall as production decreases.
Interest only Loan equation.	R=rPn Pn= amount borrowed r= interest rate.
Monthly repayment of interest only loans	rPn/ 12
Central purchasing department. Advantages.	Advantages * adminstrative load contributed, allowing production teams to concentrate on their main jobs. * it acts on behalf of several departments, bulk order= discounts * storage of items, immediate access for factory departments without order delays.
Central purchasing department. Disadvantages.	* Remoteness, purchasing and stores remote from opperations, purchasing items for which there is no longer any demand. * cost to keeping and storing items.
What is Tendering?	the process of choosing the best or cheapest company to supply goods by asking several companies to make offers for supplying the goods ordering the work.
Types of tender: Fixed price.	* Lowest risk to customer, highest risk to contractor. * Contractor needs to be sure that the task has been defined well and has a very good knowledge of how to do the job. * Preferably he will have done a similar job before. *Standard technology, with little or no innovation.
Types of tender: Cost Plus.	* Highest risk to the customer, lowest risk to the contractor. * suitable for tasks where there is considerable uncertainty over the task, such as R&D. It is also ideal for the contractor who wants to restrict his risk but possibly not make a very large profit.
Types of tender: mixture of fixed price and cost plus.	Sharing of the risk between contractor and client. Parts of the job are standard and/or well known, suitable for fixed price, other parts where there is uncertainty and so are suitable for cost-plus.
An Engineers role limited to technical roles: discussion.	*the range of problems that an engineer can tackle, from design and build of a nuclear submarine to the design and installation of computer networks. • the need to work with people in order to achieve the results, so that leadership is very important • the need to consider all aspects of a project, including the financing of a project. • the fact that many engineers have positions on the boards of companies, probably more so in France and Germany than the UK • great engineers of the past were also entrepreneurs, eg Thomas Telford, Brunel. Einstein also trained as an electrical engineer, and there was no lack of breadth in his thinking. • the ideas behind CEng and its definition: the ability to come up with new technology to fit new situations.
Most of the priorities will be common to all managers. The ones that may be more closely associated with an engineering manager might be:	1. Safety – only in the sense that the engineering manager may have more expertise. 6.Technical aspects 7. Quality Assurance – only in the sense that the engineering manager may have more expertise. 8. Training and professional development – only in the way this is applied to engineers and scientists.
3 registered categories OF Engineer	Engineering Technician (Eng. Tech.) Incorporated Engineer (I.Eng.) Chartered Engineer (C.Eng.)
Overhead allocation plans:	* absorbtion costing- full overheads applied to labour rates. * Marginal costing- no overheads applied to labour rates (assumed overheads recovered from other business activities).
Examples of where you would use absorption costing (full overheads).	* if the contractor has lots of work already, he may base his quote on high rates based on absorption costing. May not mind too much if he is rejected as too expenses. If he gets job he may overecover in overheads.
Examples on when marginal costing is necessary.	* contractor short of work.- better chance of winning work. * work at a low price is better than having a team paid for doing nothing.
Marginal costing vs Absorption costing.	* Marginal costing (hence pricing) is an alternative for one off situations and for breaking into a new market against competition. *Eventually overheads need to be paid, absorption pricing need to be applied. ATTACK OVERHEADS.
Top ten priorities for Manager (Descriptive.)	* Safety- ensuring a safe working environment for workers, and making sure that the work of the company does not affect the public's safety. * Personnel- encouragement, setting the tone for managers below you, listening. Money- obtaining funds internally and externally, seeking finances for the team. Communications- repplying/answering phone calls, emails, mail. * Talking to the media- the manager must be able to talk about their business and how it implicates the public to journalists. Quality assurance- written well thought out proceedures for standardised tasks. Technical aspects- seeking experts internal and external to the field, project management. Training and Professional development- recruitment, training, keeping team up to date. Information retrieval and storage- having knowledge over filing systems and or databases. *Day to day mechanics of management- making use of lists and diaries to keep things organised.
Chartered Engineer. Qualifications and knowledge.	* Existing knowledge and skills sufficient to optimise applications of emerging and existing technology. (Being able to create new technology for new situations. * 4 years CEng, or 3 years BEng + 1 year Msc. 2 years of industrial placement. 2 years of responsible experience. *>= 25 years of age.
Incorporated Engineer. Knowledge and qualifications.	* Knowledge and understanding suffienct for pratical use, keeps abreast with developments and updates in field. * 3 years BEng, 2 years ND, 2 years subsequent experience.
Engineering Technician. Knowledge and qualifications.	* City and Guild qualification, BTEC, 2 years subsequent experience. * Proficient in pratical use of existing techniques, plays a supporting role to engineering graduates.

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	Created by Kemi Biye-Malcolm over 9 years ago