Sudano ACG 2071 Final Exam Formulas

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27 Terms

1
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= NPV (Net Present Value)

Present Value of Future Cash - Investment

chap. 12

2
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= Profitability Index

PV of Future Cash Flows / Net Initial Investment

chap. 12

3
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= Payback Period

Investment / Net Annual Cash Inflows

(assuming equal cash inflows)

chap. 12

4
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= ARR (Accounting Rate of Return)

(Savings/year - cost/year) / Investment

chap. 12

5
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ROI (Return on Investment)

Income/Investment = Op. Income/Assets

chap. 10

6
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= RI (Residual Income)

Income - (% Cost of Capital x Investment)

chap. 10

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= Price/ rate Variance

|A.Price - Std.Price| x A.Quantity

chap. 11

8
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= Usage/Quantity/efficiency Variance

|A.Quantity -S.Quantity| x S.Price

chap. 11

9
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Variance Chart:

Master Budget

__________________________________________________________________________________

Act. Flex Mas.

__________________________________ __________________________________

Flex. Budget Variance Sales Activity Variance

/ \

Price/Rate Usage/Quantity

10
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General Rules for Budgeting

What Goes Out + Ending - Beg. = What You Need

(COGS) (Purchase)

chap. 9

11
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= Ending Cash

Cash Available - Disbursements + Financing

chap. 8/9

12
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Cost Plus Pricing

Cost + Profit = Price

chap. 7/8

13
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= Margin of Safety

Actual Sales - Breakeven Sales

chap. 7/8

14
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= Operating Leverage (Degree)

Contribution Margin / Op. Income

chap. 7/8

15
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Target Costing

Revenue at Market Price - Profit = Cost

chap. 6

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= Pre-Determined Overhead Rate

Total MOH Cost / Level of Application Base

chap. 3/4

17
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Product Costs

DM + DL + Factory Overhead (COGS)

chap 1/2/3

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Prime Costs

DM + DL

chap. 1

19
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Period Cost

Anything that is not a product cost

chap. 1

20
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Conversion Costs

DL + Factory Overhead

chap. 1

21
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= Contribution Margin

Sales - Variable Costs

chap. 3

22
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= Gross Margin

Sales - COGS

chap. 3

23
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Desired # of Units

(F. Costs + Op. Income) / CM per unit

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Break-even (# units)

F. Costs / CM per unit

25
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Desired Revenue

(F. Costs + Op. Income) / CM ratio

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Break-even (in $)

F. Costs / CM Ratio

27
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Contribution Margin Ratio

CM per unit / Sales Price per unit