ACCT 211 Equations

Sales Budget: Expected Sales Revenue Equation

Expected Sales (units) x Expected Selling Price = Expected Sales Revenue

Production Budget: Required Production (units)

Expected Sales (units) + desired ending finished goods inventory - beginning finished goods inventory = Required Production (Units)

Direct Materials Budget: Direct Materials Required for production equation

Required Production (units) x Direct Materials per Unit of Production = Direct Materials required for production

Direct Materials Budget: Direct Materials to be purchased (units)

Direct Materials Required for production + Desired ending direct material inventory - Beginning Direct material inventory = Direct materials to be purchased (units)

Direct Materials Budget: Cost of Direct Materials Purchases

Total Unit Cost Equation

Direct Materials + Direct Labor + manufacturing overhead = Total unit cost.

Required Merchandise Purchases Equation

Budgeted Cost of Goods Sold + Desired Ending Merchandise Inventory - Beginning Merchandise Inventory = Required Merchandise Purchases.

Return on Investment Equation

Controllable Margin / Average Operating Assets = Return on Investment (ROI)

Contribution Margin

Sales - Variable Costs = Contribution Margin

Controllable Margin

Contribution - controllable fixed costs = controllable margin

Standard Direct Materials Cost Equation

Standard Direct Materials Price x Standard Direct Materials Quantity = Standard Direct Materials Cost

Standard Direct Labor Cost Equation

Standard Direct Labor Rate x Standard Direct Labor Hours = Standard Direct Labor Cost

Overhead Rate per direct labor hour equation

Budgeted Overhead Costs / Standard Direct Labor Hours = Overhead Rate per Direct Labor hour

Overhead Rate per gallon equation

Predetermined Overhead Rate x Standard Direct Labor Hours = Overhead Rate per Gallon

Total Variance Equation

Materials Variance + Labor Variance + Overhead Variance = Total Variance

Total Materials Variance Equation

(actual quantity x actual price) - (actual quantity x standard price) = Total Materials variance

Materials Price Variance Equation

(Actual Quantity x Actual Price) - (Actual Quantity x Standard Price) = Materials Price Variance

Materials Quantity Variance Equation

(actual Quantity x Standard Price) - (Standard Quantity x Standard Price) = Materials Quantity Variance

Cash Payback Period Equation

Cost of capital Investment / Net Annual Cash Flow = Cash payback period.

Profitability Index Equation

PV of Net Cash Flows / Initial Investment = Profitability Index

Internal Rate of Return Factor Equation

Capital Investment / Net annual cash flow = Internal Rate of Return Factor

NPV Equation

PV - initial investment = NPV

Annual Rate of Return Equation

Annual Net Income / Average Investment = Annual Rate of Return