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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
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)
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