ACC 212 Test 1 Formulas and Definitions

(high activity cost - low activity cost)/(high activity amount - low activity amount) = Variable Cost

High low method:

Revenue- variable cost

Contribution margin:

Contribution margin ratio:

Contribution margin/revenues

Fixed costs/contribution margin ratio

Break-even sales:

Unit Contribution margin:

Price - variable cost

Required sales:

(Fixed costs + target net income)/unit contribution margin

Units sold:

Total sales/selling price per unit

Break even units (units required to hit break even):

Fixed costs/Unit contribution margin

Break even dollars:

Break even units x price

Margin of safety:

Actual sales - break even sales

Weighted average unit contribution margin:

(Unit contribution margin 1 x sales mix percentage 1) x (unit contribution margin 2 x sales mix percentage 2)

Mathematical equation:

Sales(Q) - variable costs(Q) - fixed costs = Target net income

Margin of safety ratio:

Margin of safety/actual sales

Merchandiser Income statement:

Beginning inventory + cost of goods purchased - ending inventory = COGS

Manufacturer Income statement:

Beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory = COGS

Total Manufacturing costs

sum of direct materials costs, direct labor costs, and manufacturing overhead in a current year

Total cost of work in process

(1) cost of beginning work in process and (2) total manufacturing costs for the current period

Total work in process:

Beginning work in process inventory + total manufacturing costs

Cost of goods manufactured:

Total cost of work in process - ending work in process inventory