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CPA Review - BEC > BEC Formulas > Flashcards

BEC Formulas Flashcards

1
Q

Marginal Propensity to Consume

A

Change in spending / Change in income

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2
Q

Marginal Propensity to Save

A

Change in savings / change in income

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3
Q

Multiplier Effect

A

[1/(1-MPC)] x Change in Spending

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4
Q

Price Elasticity of Demand

A

% Change in Quantity Demand / % Change in Price

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5
Q

Income Elasticity of Demand

A

% Change in Quantity Demanded / % Change in Income

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6
Q

Optimal Production

A

Marginal Revenue = Marginal Cost

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7
Q

Real GDP

A

Nominal GDP / GDP Deflator x 100

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8
Q

Disposable Income

A

Personal Income - Personal Taxes

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9
Q

Return to Scale

A

% Increase in output / % Increase in Input

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10
Q

Accounting Cost

A

Explicit (Actual) cost of operating a business

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11
Q

Accounting Profit

A

Revenue - Accounting Cost

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12
Q

Economic Cost

A

Explicit + Implicit Cost

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13
Q

Economic Profit

A

Revenue - Economic Cost

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14
Q

Number of Units Shipped

A

Beginning Inventory + Units Started - Ending Inventory

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15
Q

EFU (Wt. Avg) for DM or CC

A

Units shipped + (EI x % Comp [DM or CC])

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16
Q

EFU (FIFO) for DM or CC

A

EFU (Wt. Avg) - (Beg Inv x % Complete)

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17
Q

Cost per EFU (Wt. Avg): DM or CC

A

(Beg. Inv + Current Costs) / EFU WA

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18
Q

Cost per EFU (FIFO): DM or CC

A

(Current Costs) / EFU FIFO

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19
Q

Ending WIP

A

Beg Balance (DM, DL, OH)
+ Current Costs (DM, DL, OH)
- COGM (Goes to FG)
+ [(DM EFUs x Cost per DM EFU) + (CC EFUs x Cost per CC EFU)]

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20
Q

Gross Margin

A

Net Sales - Product Costs

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21
Q

Operating Income

A

Gross Margin - Period Costs

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22
Q

High-Low Method Cost Function

A

(Change in Cost High&Low pts) / (Change in Activity High&Low pts)

23
Q

The Present Value of $1

A

[1/(1+i)^n]

i = interest rate
n = number of periods
24
Q

Net Present Value (NPV)

A

PV Future Cash Flows - Investment

25
Q

Profitability Index

A

PV of Future Net Cash Inflows / Initial Investment

26
Q

Internal Rate of Return (IRR)

A

PV Factor = Investment / After Tax Annual Cash Inflow

27
Q

Payback Method

A

Investment / Annual Cash Flow

28
Q

Accounting Rate of Return

A

Net Income / Average Investment

29
Q

Net Working Capital

A

Current Assets - Current Liabilities

30
Q

Cash Conversion Cycle

A

Inventory CP + Receivables CP - Payables DP

31
Q

Inventory Conversion Period

A

Avg Inventory / (COGS/365)

32
Q

Receivables Collection Period

A

Avg Receivables / Credit Sales per Day

33
Q

Payables Deferral Period

A

Avg Payables / (COGS/365)

34
Q

Economic Order Quantity (EOQ)

A

√(2DO/C)

D = Unit Demand (Annual)
O = Order Cost
C = Cost of Inventory
35
Q

Inventory Re-Order Point

A

Avg Daily Demand x Avg Lead Time

Demand = Sales
Lead Time = Wait for Inventory Shipment

36
Q

Cost of Forgoing Discount

A

(Disc% x 365) / [(100% - Disc%) x (Pay Period - Disc Period)]

37
Q

Current Yield

A

Interest payment / Bond Price

38
Q

Effective (YTM, Market) Rate Bond Price

A

PV of Principle + Interest

39
Q

CAPM

A

risk-free interest rate + (the market rate – risk-free interest rate) × beta

40
Q

Cost of Debt

A

(Interest Expense - Tax Benefit) / Carrying Value of Debt

41
Q

Return on Investment (ROI)

A

Return / Investment

42
Q

Residual Income

A

Operating Income - (Required RoR x Invested Capital)

43
Q

Spread

A

ROI - Cost of Capital

44
Q

Economic Value Added (EVA)

A

Operating Income (After Tax) - (Net Assets x WACC)

45
Q

Free Cash Flow

A

Operating Income (After Tax)
+ Depreciation & Amortization
- Capital Expenditures
- Change in Net Working Capital

46
Q

Material Variances

A

Standard Material Costs - Actual Material Costs = Material Variance

47
Q

Labor Variances

A

Standard Labor Costs - Actual Labor Costs = Labor Variance

48
Q

Overhead Variances

A

Overhead Applied - Actual Overhead Cost = Total Overhead Variance

49
Q

Contribution Margin

A

Sales Price (per unit) - Variable Cost (per unit) = Contribution Margin (per unit)

50
Q

Breakeven Point (per unit)

A

Total Fixed Costs / Contribution Margin (per unit)

51
Q

DM Price Variance

A

AQ (SP - AP)

52
Q

DM Usage Variance

A

SP (SQ - AQ)

53
Q

DL Rate Variance

A

AH (SR - AR)

54
Q

DL Efficiency Variance

A

SR (SH - AH)

CPA Review - BEC (10 decks)

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