Acct final Formulas

Gross margin

Sales - Cogs

NOI (Traditional Income Statement)

Gross Margin - Selling and Admin exp

Var expenses (cm income statement)

Cogs+var selling + Var admin

Contribution Margin

Sales- Var exp

NOI (cm income statement)

Contribution margin - fixed expenses

Predetermined overhead rate

Estimated total manufacturing overhead / Estimated allocation base ( Use same allocation base when calculating variable MOH and deniminator)

Cost of goods sold

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Cost of goods Manufactured

Breakeven in Units

Fixed Exp / Unit CM

Breakeven in Dollars

Fixed Exp / CM ratio

Unit sales for Target profit formula

= Target profit + Fixed Exp / (CM/Unit)

Dollar sales for target profit

= Target profit + Fixed Exp / (CM ratio)

Contribution Margin / Unit

(Sales - Var Exp) / Units

Contribution margin ratio

Contribution Margin / Sales

Var Exp Ratio

Var exp/ Sales or 1- CM ratio

cHANGE IN NOI

CM/unit \* change in units

Margin of safety in dollars

Sales - break even sales

Margin of safety percentage

Margin of safety in dollars/ total actual sales dollars

total manufacturing cost assigned to job

Dm + DL + Cost per activity

Unit product cost

Total manufacturing cost/ units

COGS

Total manufacturing cost for each month added together.

Plantwide predetermined rate

Total estimated manufacturing overhead / estimated total machine hours

Manufacturing overhead applied to each job

Machine hours \* Plantwide predetermined overhead rate

Total Budgeted sales

Unit sales \* selling price per unit

Expected cash collections for a month

% collected from prior month (Prior month units *unit selling price) + % collected from current month (Current month units* \* units selling price)

Accounts receivable balance end of month

% to be collected next month (months units \* unit selling price)

How many units should be produced

Total budgeted sales + desired ending fg - beg fg

Raw materials purchased

Required production \* units of raw material = Raw mat to meet production

Raw mat to meet production + ending raw materials - Beginning raw material

Estimated cost of raw materials per month

Raw material purchases \* Price of raw material

Total estimated cash disbursements for a month

Cost raw mat purchases prior month *% paid for that month + Cost raw mat purchases current month* \* % paid for that month

Account payable balance end of month

Raw mat purchases for that month \* % unpaid

Raw materials inventory balance end of month

Desired raw materials balance and the end of the month \* raw material price/unit

Total estimated direct labor cost for a month

Required production ** direct labor hours per unit * labor rate per hour*

Estimated unit product cost

DL (2 hours per unit ** 15$ per DLH) + DM (5 pounds RM per unit * 2$ per pound) + MOH (2 DLH per unit * 8$ per DLH)*

Ending FG inventory

Ending Fg inv in units (total sales next month \* *desired end fg as % of next month sales) * unit product cost*

estimated COGS per month

Budgeted unit sales per month (given in problem) \* est unit product cost

Gross margin for month

Total sales ( based on given product price \* budgeted unit sales per month) - Est Cogs (Based on est unit product cost)

Est total selling and admin for a month

(var sell and admin exp per unit \* total budgeted units) + total fixed selling and admin exp

Est NOI per month

Gross margin - total Selling and admin cost

Sales per period

Budgeted unit sales in that period \* selling price per unit

Revenue in flexible budget for a month

Variable element \* actual activity

Net operating income for flexible budget for a period

Calculate all with budget cost \* actual activity

Revenue - exp

Revenue variance

Actual results (Actual cost \* *actual activity) - Flexible budget revenue (Budget cost* \* actual activity)

A negative result is unfavorable

Spending variance (EXP)

Actual Budget (Actual activity \* actual costs) - Flexible budget (Actual activity \* *budgeted costs)*

*A negative result is favorable*

Revenue planning budget

Budgeted cost \* Budgeted activity

Activity Variance

Flexible (Actual activity \* *Budgeted costs) - Planning (Budgeted costs * Budgeted activity)*

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Positive result is favorable

Standard labor hours allowed to make certain number of product

total units/Standard units per hour

Standard Labor cost allowed

Standard labor hours allowed \* standard rate per hour

Labor spending variance

Actual Labor cost - Standard labor cost

Positive is unfavorable

Rate variance

(AH \* *AR) - (AH* \* SR)

Positive is unfavorable

Efficiency Variance

(AH \* *SR) - (SH* \* SR)

Positive is unfavorable

Spending variance

Rate variance - Efficency Variance

Positive is unfavorable

To find planning budget SQ or SP when not given

Actual units sold \* amount of labor hours or pounds of direct material per unit

Margin

NOI/ Sales=%

turnover

Sales/Average Operating Assets

ROI

Margin \* Turnover

Residual income

Net operating income- Minimum Required Return (Minimum Rate of return % \* Average Operating Assets)

Return on investment

Margin \* Turnover

Average Operating Assets for the year

Beg operating assets (Doesn’t include investments or undeveloped land) + end operating assets

Then divide that total by 2 to get an average

Margin with new investment

NOI from investment (Sales - var exp given by cm ratio - fixed exp) / Investment sales

Turnover related to investment

Investment sales / AOA (shown as the $ amount of investment oppurtunity)

Margin if investment is accepted

NOI (Given + NOI investment)/ (Sales Given + Sales investment)

Turnover if investment is accepted

(Sales given + Sales Investment) / (AOA given + AOA investment)

Financial Advantage/Disadvantage per quarter of discontinuing product line

Lost cm (-) + avoidable fixed costs + Salary of manager (would be avoided if line discontinued)

Financial Advantage/Disadvantage make or buy

Cost of making (Units \* *Traceable costs per unit) - Cost of buying (Units* \* cost per unit)

If negative then disadvantage

Financial Advantage/Disadvantage of a special order

Units that would be purchased \* (Purchase price - (Variable costs) DM - DL -Variable MOH) - Any fixed cost

CM per unit of constrained resource

CM per unit (sales-var exp) / Constrained resource units to make one unit

Max overtime rate/hr

CM of product / Labor hrs per unit

Additional CM per hour

CM / unit - hourly price of new labor

Financial Advantage/Disadvantage of further processing

Revenue from additional processing (($/unit \* Units produced) - Fixed cost from extra processing) - Revenue before aditional processing

Annual Net cash flows

NOI + any noncash deduction or Sales - Var exp - Out of pocket costs

Present value of projects annual cash inflows

Cash inflows \* PV factor (18% 5 years)

Project Net Present Value

Create two tables one present values (purchases) one for everything that you would discount back to the present

Total cash flows \* Discount factor - Purchase

Profitability index

Present Value cash inflows/ Investment required

Higher is better

Internal Rate of Return

First find the factor for the IRR = Investment Required / Annual Cash Inflow

Then match the factor with the closest value on the tvm table using the # of periods that are given

Payback Period

Investment required / annual net cash inflow

Simple rate of return

Annual incremental NOI (given) / Initial Investment