Damage = base Power + User ?1? + (User LV - Target LV) * ? - Target VIT - Target ?2?
Accuracy (%) = base Hit + User DEX * 5 + (User LV - Target LV) * ? - Target DEX * 3 - Target AP * ?3?
The level bonus mod is unknown, but it's not insurmountable. You have a more than reasonable chance of taking down opponents several levels above you on Normal.
?1? = STR if Melee skill, DEX if Ranged skill, MNT if Magic skill, RES if Poison skill
?2? = STR if Physical skill, RES if Magic or Poison skill
?3? = 1.25 if Physical and target has Parry, 1.5 if Physical and target has Floating, 1.25 if Ranged/Magic and target has S-Field, 1.5 if Magic and target has D-Field
Damage is further reduced by resistances after calculations above.
Accuracy is further modded by Flow/Panic (Flow grants +25% accuracy and evasion, Panic is the reverse; they can stack, meaning user Flow and target Panic = +50%)
The basic strategy for most tougher encounters is to keep your own AP high while using your highest accuracy skill. If the opponent dodges, she loses 5 AP. If not, you hit her and gain 1CP, while still damaging her AP. This way, you can slowly burn her AP away until she attacks with her harder-hitting skills.
Once her AP is low (ideally <20), then you can reliably hit her with your weak skills to charge your own CP for Flow or risk a more powerful skill to burn VP quicker. If your opponent enters Flow, then it's Guard and pray with most units. Sylvi, since she has Recovery, can basically spam Shot non-stop without burning through her AP. The other units can alternate between Guard and basic skills. If your opponent ends up with really low AP, don't rush to go all-in unless you're going for the kill.
The most important thing in most fights is to avoid getting critted into oblivion with low AP, since it subtracts from your CP and gives your opponent +2CP, in addition to taking massive damage and often getting your clothes Torn. This is why high AP is important.
For those complaining about the grindy nature of the game, try the following:
1. Go into preferences and set S/down arrow to turn around rather than move backwards.
2. Find a nice long corridor.
3. Press 2 or PgUp to auto-move until you hit the end of it. Press S/down arrow to turn around.
4. Whenever you enter a battle, immediately press S (skip mode) and then A (auto battle).
5. Repeat steps 3 and 4 until satisfied. A good benchmark for most bosses is to make sure your units are at the same level as the highest level normal encounter.
HOW2CHEAT:
Using Cheat Engine to change your mana shard count (money) is easy. Save first. Open your menu and have at least one item in your inventory to update the display with. Make sure you have at least >100 mana shards, ideally >1000, (or else you'll get too many results) and run an exact search with default settings. Add everything you see to the address list. Change half the values and then hover your mouse over an item to check if your shard count changed. If it did, delete all other addresses and repeat. If not, change all the values back and delete those addresses. Keep going until you find the right address, then change it to whatever you want.