ACC 102 - Key Equations and Concepts

These flashcards cover key equations and concepts relevant to ACC 102 as discussed in the lecture.

Total Overhead Equation

y = a + bx, where y = total overhead, a = fixed overhead, b = variable overhead cost per unit, and x = total amount of allocation base.

Predetermined Overhead Rate (POHR)

POHR = Estimated total overhead / Estimated allocation base.

Contribution Margin (CM)

CM = Sales less Variable expenses.

Net Operating Income (NOI)

NOI = CM – Fixed expenses.

Breakeven in Quantity (BEQ)

BEQ = Fixed expense / CMU.

Breakeven in Sales Dollars (BE$)

BE$ = Fixed expense / CM%.

Margin of Safety (MOS)

MOS = Actual sales - BE$.

Target Profit in Quantity (TPQ)

TPQ = (TP + fixed expense) / CMU.

Degree of Operating Leverage

Degree of Operating Leverage = CM / NOI.

Segment Margin

Segment margin = Segment CM – Traceable fixed expense.

Direct Material Price Variance (DM price)

DM price = AQ(SP - AP).

Direct Material Quantity Variance (DM Q)

DM Q = SP(SQ - AQ).

Direct Labor Rate Variance (DL rate)

DL rate = AH(SR - AR).

Direct Labor Efficiency Variance (DL efficiency)

DL efficiency = SR(SH - AH).

Variable Factory Overhead Rate Variance (VFOH rate)

VFOH rate = AH(SR - AR).

Variable Factory Overhead Efficiency Variance (VFOH eff)

VFOH eff = SR(SH - AH).

Margin

Margin = NOI / Sales.

Turnover

Turnover = Sales / Average operating assets.

Return on Investment (ROI)

ROI = EBIT / Average operating assets.

Residual Income

Residual income = Actual EBIT - (avg operating assets x Minimum required rate of return).