Formula Flashcards
Contribution per unit
Selling price (per unit) - variable cost (per unit)
Cost per unit
Total cost / Number of units
High low method
What does it give you? & What do we do with it?
(Highest cost – lowest cost) / (Highest output – lowest output)
=Variable cost per unit
We can then use the VC Per unit to calculate FIXED COSTS
Break even – units
Total fixed costs/contribution per unit
Breakeven – sales revenue
Total fixed costs/contribution per unit X selling price
Margin of safety percentage
[current output – breakeven output/current output] X 100
Target profit – units
(Total fixed cost + target profit) / Contribution per unit
Contribution to sales ratio
Contribution £ /selling price £
Cost per unit of expected output
(Input cost – scrap value of normal cost) / expected output
Economic order quantity
Square root of (2 x annual demand x order cost) / Annual inventory holding cost for one unit
% difference
Difference / gross or retail x 100
Sustainability is
Is ability to last
Meeting the needs of the present without compromising the needs of the future
The three elements of sustainable development are plant profit and people
PLCA- which side is purchases on
Right side
SLCA which side is sales on
The left side
VAT CA which side is the purchases and sales on?
Opposites to PLCA and SLCA
Purchases on left
Sales on right
Structure of SOFP
NON C ASSETS
CURRENT ASSETS
CURRENT LIABILITIES
(Current assets-current liabilities) = NET CURRENT ASSETS
NON C LIABILITIES
(Non current assets - NET current assets - non current liabilities) = NET ASSETS
If you discover that the client has been money laundering who do you report it to
The National crime agency
Mark up profit is calculated as a % of _____
Mark up profit is calculated as a percentage of the cost (COS)
Margin profit is calculated as a % of ___________
Margin profit is calculated as a percentage of selling price
Margin what is treated as 100%
Selling price
Mark-up what is treated as 100%
Cost (COS)
Structure of SOPL
Sales rev
Op inv
+Purchases
-Clos inv
= cost of goods sold
(Sales rev-COS) =Gross profit
Add any income
Less any expenses
Total expenses
= Profit/Loss for year
Ownership:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader- sole trader owns
Partnership- partners own
Limited liability partnership - members own (separate legal entity)
Limited company - owned by shareholders (separate legal entity)
Charity - owned by trustee
Management:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader - manages
Partnership - all partners can manage
Limited liability partnership - all members can manage
Limited company - run by directors on behalf of shareholders
Charity - trustee
Responsibility for debts:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader - fully liable
Partnership - fully liable
Limited liability partnership - loose up to investment
Limited company - loose up to investment
Charity - for an unincorporated charity trustees are liable
Taxation of profits:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader - income tax on profits by owner
Partnership - each partner liable for income tax on their share
Limited liability partnership - each member liable for income tax on their share
Limited company - cooperation tax on profits
Charity - exempt on tax if income is used for charity
Ownership terminology:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader - Capital Partnership - Capital Limited liability partnership - Capital Limited company - Equity Charity - Net assets form funds
Distributions terminology:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader - drawings Partnership - drawings Limited liability partnership - drawings Limited company - dividends Charity - distributions
Accounting regulations:
Sole trader Partnership Limited liability partnership Limited company Charity
Sole trader: No regulations financial statements a private Partnership: Partnership act 1890 Partnership agreement Financial statements are Private Limited liability partnership : Limited liability partnership act 2000 Limited liability partnership agreement Financial statements visible on companies house Limited company : Companies act 2006 Financial reporting standards Financial statements are on companies house Charity : Charities act 2011 Charity regulations Financial statements are available to the public via charity commissions
Definition of material mistake
When information contained in financial statements is untrue
Provide an example of material mistake
Where profit is overstated in order to encourage investors to buy a stake in the business
Where assets are overvalued a lender may find that security for a loan is less than expected
Profit is understated and therefore a lower amount of tax is paid to HMRC then should be
Sales turnover is overstated therefore more VAT is paid to HMRC then should be paid
Define whistleblowing
A person who tells and authority about misconduct of a genuine concern in good faith
The definition of bribery
Giving or receiving something of value with intention of influencing receipt to do something favourable to the giver of the bribe
Bribery:
You can be fined up to
You have a prison sentence up to
It must be over what amount to classify as bribery
Define it’s for bribery is unlimited
The maximum penalty in prison is 10 years
It doesn’t have to be over a set amount
What is sustainability
Sustainability is meeting the needs of the present without compromising the needs for the future
Identify responsible long-term management for sustainability
Plant profit people
What is integrity
Being straightforward and honest
What is objectivity
Being non-biased and levelheaded
What is professional competence and due care
Professional knowledge and skill to be at level required
Ensure client or employer receives a full professional service
Keep within practice and legal guidelines and legislation
To act in accordance with AAT standards
What is confidentiality
Respect information
Do not disclose information unless there is a professional right or duty to disclose or proper authority is given to disclose that information
Do not use personal information for your own advantage
What is professional behaviour
To comply with laws and regulations avoiding bringing profession into dispute
Over head absorption rate calculation
Budgeted production overhead / budgeted activity levels
Prime cost
?
Full absorption cost
?
Marginal production cost
?
Over head absorption rate calculation
Budgeted production overhead / budgeted activity levels
Prime cost
?
Full absorption cost
?
Marginal production cost
?
