BEC Formulas Flashcards
What is the formula to calculate APR of quick payment discount and what does it measure?
APR = (360/Pay period - Discount Period) x (Discount %/100% - Discount %)
Measures the impact of not taking advantage of discounts
What is the formula to calculate Economic Order Quantity and what does it measure?
EOQ= Square root of (2 x sales x cost per PO)/carrying cost per unit)
Intents to minimize total order and carrying costs
What is the formula to calculate Reorder point Quantity and what does it measure?
Reorder point=Safety stock + (lead time x sales during lead time)
Measures when a company should order or manufacture additional inventory to meet demand and to avoid incurring stock out costs
What are the formulas to calculate Raw Materials Used, Cost of Goods Manufactured, and Ending Finished Goods Inventory?
Raw Materials Used =
Beginning RM + RM Purchased - Ending RM
COG Manufactured = Beginning Work In Process + Manufacturing Costs*
-Ending Work in Process
Ending Finished Goods Inventory= Beginning FG Inventory + COG Manufactured - Cost of Goods Sold
*DM + DL + OH
What is the formula for the WACC?
WACC=
[(E/V)Re]+[(P/V)Rp]+[(D/V)*Rd(1-T)]
V = The summed market values of the individual components of the firm’s capital structure: common stock, preferred stock, and debt
R = Required rate of return AKA the cost
T = Corporate tax rate
What are the formulas to calculate the cost of Debt and Preferred Stock
COD = Pretax COD*(1 - Tax Rate)
Preferred Stock = (Par Value x rate)/Net Proceeds of preferred stock aka market value
What are the three different types of formulas used to calculate the Cost of Retained Earnings?
1) CAPM = Risk Free Rate +[Beta*(Market Return - Risk Free Rate)]
2) Discounted CF = (Dividend per share @ end of one year/Market Value)+Constant Rate of Growth
**Dividend per share @
end of one year =
Dividend just paid(1+
growth rate)
3) Bond Yield Plus Risk Premium = Pretax cost of LT Debt + Market Risk Premium
What are the formulas Price Elasticity of Demand, Supply, Cross elasticity, and Income
Demand= % change in quantity demanded/$ change in price
Supply = % change in supply demanded/$ change in price
Cross = % change in number of units of x demanded (supplied)/% change in price of Y
Income = % change in number of units of x demanded (supplied)/% change in income
What is the formula for breakeven point in units and dollars
Units = Total FC/Contribution Margin per unit
Dollars = Total FC/Contribution Margin ratio
What is the formula for sales units needed to obtain a desired profit
Sales = FC + Pretax Profit/Contribution margin per unit
What is the formula for sales dollars needed to obtain a desired profit
VC + FC + Pretax Profit
OR
FC + Pretax profit/Contribution Margin ratio
What is the formula for setting selling prices
FC + VC + Pretax profit/ number of units sold
What is the formula to apply overheard under traditional costing?
Step 1 - Calculate OH Rate:
OH Rate= All Bdgtd OH Costs/Single Esmtd costs driver
Step 2 - Calculate Applied OH Rate: Actual Cost Driver x Step 1
What are the formulas for ROI, ROA, ROE
1) ROI = Profit Margin x Investment TO
Profit Margin = Income/Sales
Investment TO = Sales/Invested Capital
2) ROA = Net Income/Average Total Assets
3) ROE = Net Income/Equity
OR
Net Income/Sales x Sales/Assets x Assets/Equity
What are the formulas for Residual Income and EVA
1) Residual Income = Net Income - (NBV x Hurdle Rate)
2) EVA = NOPAT - (Investment x WACC)
NOPAT = EBIT x (1-T)
