Equations

Question 1

Gross Margin % =

Answer 1

net sales / COGS

Question 2

CVP

Answer 2

Sales Revenue - Variable Cost - Fixed Cost = Profit

Question 3

Breakeven CVP

Answer 3

Sales Revenue - Variable Cost = Contribution Margin

Question 4

Contribution Margin Ratio =

Answer 4

contribution margin / sales revenue

Question 5

Net income =

Answer 5

operating income - interest expense - taxes
OR
revenue - expenses

Question 6

Operating Income =

Answer 6

sales - COGS - Operating expenses

Question 7

activity rate =

Answer 7

the cost pool total / the number of cost driver events

Question 8

predetermined overhead rate =

Answer 8

estimated overhead costs / estimated level of activity

Question 9

% of sales =

Answer 9

income statement amount / sales

Question 10

Corporation’s total owners’ equity =

Answer 10

the amount of retained earnings + amount of capital stock

Question 11

ending retained earnings =

Answer 11

Beginning retained earnings + net income for the period (also called earnings) - dividends paid during the period

Question 12

common size income statement =

Answer 12

dividing all financial statement amounts for a given year by sales for that year

Question 13

common size balance sheet statements =

Answer 13

dividing each balance sheet item by total assets for that year

Question 14

the production budget =

Answer 14

Sales budget + ending finished goods inventory - beginning finished goods inventory

Question 15

Direct materials production budget =

Answer 15

Production budget * direct materials per unit

Question 16

direct materials budget =

Answer 16

Direct materials production budget + ending direct materials inventory - beginning direct materials inventory

Question 17

(revenues) Cash collected from customers =

Answer 17

(current period revenue * current period collection rate) + cash collected from previous period sales

Question 18

(revenues) Cash payments to suppliers =

Answer 18

(current period purchases * current period payment rate) + cash paid on previous period purchases

Question 19

cost variance =

Answer 19

Actual cost - budgeted cost

Question 20

COGS =

Answer 20

the amount of beginning finished goods inventory at the beginning of the period + Cost of goods manufactured - ending amount of finished goods inventory available at the end of the period

Question 21

estimated manufacturing overhead =

Answer 21

estimated manufacturing overhead / estimate of the expected level of activity

Question 22

ABC activity rates: overhead cost to be allocated per driver =

Answer 22

Overhead cost pool / cost driver