Cost / chapter 2 / little formulas

dm

direct materials

dl

direct labor

voh

variable overhead

foh

fixed overhead

vma

variable marketing and administrative

fma

fixed marketing and administrative

variable cost per unit

dm + dl + voh + vma

variable manufacturing or production cost per unit

dm + dl + voh

full cost per unit

dm + dl + voh + vma + foh +fma

full absorption cost per unit

dm + dl + voh + foh

profit margin per unit

sales price - full cost (dm, dl, voh, vma, foh, fma)

gross margin per unit

sales - COGS (dm, dl, voh, foh)

contribution margin per unit

sales - variable costs (dm, dl, voh, vma)

full absorption cost is also…

COGS

conversion cost per unit

dl + voh +foh

prime cost per unit

dm + dl

full absorption costing income statement

sales revenue - COGS = gross margin - marketing and admin costs = operating profits

Variable costing income statement

sales revenue - variable costs = contribution margin - fixed costs = operating profit