D101 - Cost & Managerial Accounting Formulas

Western Governors University (WGU)

Predetermined Overhead Rate

(Estimated Overhead) / (Estimated Activity)

Cost of Goods Manufactured

(Total Manufacturing Costs) + (Beginning WIP Inventory) - (Ending WIP Inventory)

CVP Equation

Profit = (Sales Revenue) - (Variable Costs) - (Fixed Costs)

Contribution Margin

(Selling price) - (Variable cost)

Fixed Costs

[(Contribution Margin) x (Number of Units Sold)] - Net Income

Degree of Operating Leverage

(Contribution Margin) / (Operating Income)

Margin of Safety

(Current level of sales) - (Break-even level of sales)

Gross Profit

Revenue - CoGS

Gross Margin Percentage

[(Gross Profit) / (Sales)] x 100%

Variance: Quantity/Efficiency

(Standard # - Actual #)(Standard $)

Variance: Price/Rate

(Standard $ - Actual $)(Actual #)

Variance: Manufacturing Overhead Spending

[(Standard $) x (Actual Hrs)] - Actual $

Cost of Goods Available for Sales

(Beginning finished goods inventory) + (Cost of goods manufactured)

Unadjusted CoGS

(Cost of Goods Available for Sales) - (Ending finished goods inventory)

Adjusted CoGS

(Unadjusted CoGS) - (Overapplied Manufacturing Overhead)