Final Flashcards
Direct materials used(Raw Materials Inventory)=
Beginning raw materials inventory \+Purchases =Materials available for use -Ending raw materials inventory =Direct Materials Used
Cost of Goods Sold=
Beginning Inventory \+Purchases =Cost of Goods Available for Sale -Ending Inventory =Cost of Goods sold
Work In Process Inventory=
Beginning WIP
+Total Manufacturing Costs(DM+DL+MOH)
-Ending WIP
=Cost of goods manufactured
Total Current Assets=
Cash
+Accounts Payable
+Total Inventory
+Prepaid Expenses
Purchases include
Import duties, freight in, and items purchased
Operating Income=
Sales -Cost of Goods Sold =Gross Profit -Operating Expenses =Operating Income
Gross Profit=
Sales
-Cost of Goods Sold
=Gross Profit
Variable costs change in ______ proportion to volume
Direct
Fixed costs stay the same, but are PER UNIT change ______ to volume
Inversely
Total mixed costs ______ as volume increases
Increase
Mixed costs PER UNIT ______ as volume increases
Decrease
Relevant range is when Total fixed costs and variable costs per unit ______
Stay the same
High Low method step 1
Find the highest and lowest volume points and calculate slope
High Low method step 2
Find the fixed cost component by using the slope and data from either high/low points.
y=vx+f
High Low method step 3
Using the variable cost per unit from step 1 and the fixed cost from step 2 write an equation
y=8x+8000
Variable manufacturing costs include
Direct labor, Direct materials, variable MOH
Fixed MOH costs include
taxes, insurance on the plant, straight line depreciation, lease payments
Absorption costing includes _________,_______,_______,_______, where as variable costing does not include _______.
DM, DL, Variable MOH, Fixed MOH,
Fixed MOH
Contribution Margin =
Sales revenue
-variable expenses
Operating income=
Sales -Variable expenses =Contribution Margin -Fixed expenses =Operating Income
Contribution margin ratio=
Unit contribution margin/sales price per unit
or
contribution margin/sales revenue
Contribution margin per unit=
Sales price per unit
-Variable cost per unit
=CM per unit
To find sales in units=
(Fixed expenses+Operating income)/CM per unit
To find sales in dollars=
(fixed expenses+operating income)/CM ratio
Operating leverage factor=
CM/Operating income
Margin of safety=
Expected sales
-Breakeven sales
Target Total Costs=
Revenue at market price
-Desired profit
=Target Total Cost
Strategic planning is _____ term goals
long
What is the master budget?
The comprehensive planning document for the entire organization
Units to Produce=
Production Budget
Units needed for sales \+Desired ending inventory =Total units needed -Units in beginning inventory =Units to produce
safety stock
Inventory kept on hand incase demand is higher
Also considered desired ending inventory
Quantity of DM to purchase=
DM budget
Quantity of DM needed for production \+Desired DM ending inventory =Total quantity of DM needed -DM beginning inventory =Quantity of DM to purchase
Total Direct Labor Cost=
DL budget
Units to be produced *DL hours perunit =Total DL hours required *DL cost per hour =total DL cost
Net Income=
Sales Revenue -COGS =Gross Profit -Operating Expenses =Operating Income -Interest Expense -Income Tax expense =Net Income
Flexible budgets
Budgets prepared for different volumes of activity
Return on Investment=
ROT
Operating income / Total assets
Sales margin=
SOS
Operating income / sales
Capital Turnover=
CST
Sales / total assets
Residual Income=
RIOTT
operating income - (target rate of return * total assets)
Master budget variance=
actual revenues/expenses and the master budget
Flexible budget variance=
flexible budget
-actual results
Return on investment
measures the amount of income an investment center earns relative to the size of it’s assets
Residual income
determines whether the division has created any excess income above and beyond expectations
sales margin
focuses on profitability by showing how much operating income the division earns on every $1.
Capital turnover
focuses on how efficiently the division uses its assets to generate sales revenue
Flexible budget
budgets based on the actual activity of a period
sales volume variance is
units actually sold
-number of unites expected to be sold according to the static or original budget
Direct Materials Quantity Variance=
Standard Price * (Std Quant Allowed - Actual Quantity Used)
Direct Labor Efficiency Variance=
Standard rate * (Standard Hours Allowed - Actual Hours)
Direct Labor Rate Variance=
Actual hours * (Standard rate - actual rate)
Direct Material Price Variance=
Actual Quantity Purchased * (Standard price- actual price)
Payback Period=
Amount invested / expected annual net cash inflow
Accounting Rate of Return=
Average annual operating income from asset / initial investment
or
(Average annual net cash flow - depreciation expense) / initial investment
Annual depreciation expense=
(Initial cost of asset - residual value) / useful life of asset
Factors affecting the time value of money:
Principal, number of periods, interest rate
