BEC SFCPA Flashcards
What is the DuPont ROE formula?
profit margin x asset turnover x equity multiplier
(net income / sales) x (sales / gross assets) x (assets / equity)
What is the ROI formula?
net income / total assets
What is the formula for residual income?
operating income - required return on invested capital, or (required rate of return x invested capital)
What is the formula for ROE?
net income / average shareholder’s equity
What is the formula for ROA?
net income / average total assets
What is the most likely strategy to reduce the breakeven point?
reduce fixed costs and increase the contribution margin
What is the formula to calculate sales in number of units to achieve a certain level of income?
fixed costs + target profit / contribution margin per unit
What is the margin of safety?
the difference between current sales and breakeven sales
what type of costing assigns direct material, direct labor and factory overhead aka manufacturing overhead to inventory?
absorption costing
remember - all manufacturing costs are being “absorbed”
What costs are included in variable costing aka direct costing?
direct costs like direct materials and direct labor
