CPIM Part 2, Formulas And Calculations

Question 1

Contribution margin

Answer 1

Contribution margin

Sales
-
Variable costs

Question 2

Contribution margin (CM) ratio

Answer 2

CM
/
Sales

Question 3

Net income

Answer 3

Variable and fixed costs

Question 4

B/E point (units)

Answer 4

Fixed costs / Unit CM

Question 5

B/E point (dollars)

Answer 5

Fixed costs / CM Ratio

Question 6

Target income sales volume

Answer 6

(Fixed costs + targeted income)
/
Unit CM

Question 7

Current Ratio

Answer 7

Current Assets
/
Current liabilities

Question 8

Quick asset ratio

Answer 8

(Current assets - inventory)
/
Current liabilities

Question 9

Inventory turnover

Answer 9

Cost of goods sold
/
Average inventory

Question 10

Debt ratio

Answer 10

Total liabilities
/
Total assets

Question 11

Profit margin

Answer 11

Net income
/
Net sales

Question 12

Earnings per share

Answer 12

(Net income - preferred dividends)
/
Common stock outstanding

Question 13

Days inventory outstanding

Answer 13

(Average inventory
/
Cost of goods sold)
X
365

Question 14

Days sales outstanding

Answer 14

(Average accounts receivable
/
Net credit sales)
X
365

Question 15

Days payables outstanding

Answer 15

(Average accounts payable
/
cost of goods sold)
X
365

Question 16

Return on investment (ROI)

Answer 16

(Gain from investment - Cost of investment)
/
Cost of investment

Question 17

Payback period

Answer 17

Cost of investment
/
Annual cash savings

Question 18

Residual income

Answer 18

(Minimum required rate of return x operating assets)

Question 19

Absolute Forecast Error

Answer 19

A-F
Actual demand - forecast demand

Question 20

Absolute percent error

Answer 20

(A-F)
/
A

Question 21

Forecast accuracy

Answer 21

1 - Absolute Percent Error

Question 22

Mean squared error (MSE)

Answer 22

(Sum of (Errors for each period)^2)
/
Number of forecast periods

Question 23

Standard deviation

Answer 23

√(SUM(Actual - Average)^2
/
n-1)

Question 24

PAB

Answer 24

Prior period PAB or on hand balance
+
MPs
-
Greater of production forecast or customer orders

Question 25

Ending projected available balance (PAB) before demand time fence

Answer 25

Prior period PAB
+
Scheduled MPS receipt
-
Customer orders

Question 26

Ending projected available balance (PAB) after demand time fence

Answer 26

Prior period PAB + scheduled MPS receipt - greater of customer orders or forecast

Question 27

ATP period 1

Answer 27

On-hand quantity + MPS - SUM(customer orders before next MPS)