Formulas Flashcards
High-Low Method
(High Cost - Low Cost) / (High Output - Low Output)
*Identify the relevant costs from the highest and lowest outputs.
Minimum Inventory Level
Reorder Level - (Average Usage x Average Lead Time)
Maximum Inventory Level
Inventory Buffer + Maximum Reorder Quantity
Reorder Level
(Average Usage x Average Lead Time) +Inventory Buffer
Minimum Reorder Quantity
Average Usage x Average Lead Time
Maximum Reorder Quantity
Maximum Inventory Level - Inventory Buffer
Economic Order Quantity
Square Root of (2 x Ordering Cost x Annual Demand) / Cost of Holding 1 Unit for 1 Year)
Average Price per Unit
(Total Value of Opening Inventory + Total Value of Units Added) / (Units of Opening Inventory + Units Added to Inventory)
Cost Apportionment
(Value of Apportionment Base of Cost Centre / Total Value of Apportionment Base) x Total Overhead Cost
Overhead Absorption Rate
Production Overhead / Activity Level
Amount Absorbed
Actual Production Activity x OAR
Cost per Unit
Cost of the Batch / Number of Units in the Batch
Cost per ‘Good’ Unit
(Cost of the Batch - Scrap Proceeds from Normal Loss) / (Unit Input - Normal Loss Units)
Flexed Budget
(Budgeted Sales or Expenses / Budgeted Production Level) x Actual Units Produced
Breakeven Point
Fixed Costs / Unit Contribution
Breakeven Revenue
Fixed Costs / PV Ratio
Profit-Volume Ratio
Contribution / Sales
Margin of Safety (in Units)
Budgeted Sales Volume - Breakeven Sales Volume
Margin of Safety (%)
((Budgeted Sales Volume - Breakeven Sales Volume) / Budgeted Sales Volume) x 100
Target Profit
(Fixed Costs + Required Profit) / Unit Contribution
Trade Receivables Collection Period
( Trade Receivables / Revenue) x 365
Inventory Holding Period
(Inventory / Cost of Sales) x 365
Trade Payables Payment Period
(Trade Payables / Cost of Sales) x 365
Working Capital Cycle
Trade Receivables Holding Period + Inventory Holding Period - Trade Payables Payment Period
