equations Flashcards
Overhead Allocation Rates equation?
OAR=
Budgeted Overhead
/
Budgeted Activity Level (Allocation Base)
Activity Level measured in machine hours, labour hours, or other suitable units.
Calculated using budgeted (estimated) figures before the accounting period.
Post-Period Analysis:
Actual overheads and production known at period end.
Enables calculation of under or over absorption.
Break-even point (units) equation?
Break-even point (units) =
Fixed costs / Contribution per unit
what is the equation for Profit volume ratio? also known as contribution margin ratio or C/S ratio
Profit volume ratio =
CM per unit / Selling price/unit
X100
margin of satfey equation?
Margin of safety = Total sales – Break-even sales
Break-even point (revnue) equation?
Break-Even point (sales dollars) =
Fixed Costs ÷ Contribution Margin.
what is the Accounting Rate of Return (ARR) equation?
ARR =
Average Annual Profit
Average Investment
x 100
Average Investment equation?
Average Investment =
( Opening investment + closing scrap value ) / 2
what is the present value equation?
Present value =
FV / (1+r) ^ n
NPV equation?
NPV = PV Cash inflows – PV Cash outflows
Poriftbility index?
Profitability Index =
(PV of cashinflows)
/ Initial Outlay
What is the IRR interpolation equation?
A + ( C/ C-d) (B-A)
A: discount rate of the lower trial
B: discount rate of the higher trial
C: NPV of the lower trial
D:NPV of the higher trial
What is the fisher equation?
the fisher equation:
1 + nominal rate of retun (N) =
( 1+ real rate of return (R) ) X
(1 + expected rate of inflation (I))
nominal cashflow =
nominal cashflow = real CF x (1 + inflaiton rate) ^n
real cashflow =
real cashflow =
nominal CF / (1 + rate of inflation)^n
what are the two cost variance formulas? what is the cost formula?
Cost variance = Budgeted cost − Actual cost
Cost= Price × Quantity
Cost variance = Price variance + Quantity variance
what is the price variance formulas?
Where: S= Standard, A= Actual, P= Price, Q= Quantity.
Price variance = (SP − AP) × AQ
(i) (Price − Price)
(ii) (Standard price − Actual price)
(iii) (Standard price − Actual price) × Actual quantity of inputs
This convention reflects the total difference in money paid for supplies due to price changes.
what are the quantity variance formulas?
Where: S= Standard, A= Actual, P= Price, Q= Quantity.
Quantity variance = (SQ − AQ) × SP
(i) (Quantity − Quantity)
(ii) (Standard quantity − Actual quantity)
(iii) (Standard quantity of inputs − Actual quantity of inputs) × Standard price
This convention reflects the difference in the cost of supplies due to changes in quantity of inputs only (i.e. it is not distorted by any price change).
whats the equation for Total direct materials cost variance?
**Total direct materials cost variance
=
Direct materials
Price variance
+
Direct materials
Usage variance
2
whats the equation for Total direct labour cost variance?
Total direct labour cost variance
Direct labour
Rate variance
+
Direct labour
Efficiency variance
Actual FOH - Absorbed FOH
whats the equation for Total variable overhead cost variance?
Total variable overhead cost variance
Variable overhead
Rate variance
+
Variable overhead
Efficiency variance
