Formulas

Question 1

Turnover ratio

Answer 1

Sales/Operating assets

Question 2

EVA

Answer 2

OI-WACC*Capital

Question 3

Gross Margin

Answer 3

Operating income/Sales

Question 4

Value added activity

Answer 4

SQ*SP

Question 5

Fixed activity rate = SP

Answer 5

SP = FC/Capacity

Question 6

Non value added activity

Answer 6

(AQ-SQ)*SP

Question 7

Three measures of unused capacity

Answer 7

SP*SQ

SP*AQ

SP*AU

Question 8

Direct materials

Answer 8

Beg. Bal. Raw materials + Raw. materials purchased - End Bal. Raw materials

Question 9

Prime cost

Answer 9

Direct materials + Direct labor

Question 10

Overhead

Answer 10

Indirect costs (That are relevant for the production e.g. utilities, insurance or rent)

Question 11

Conversion cost

Answer 11

Direct Labor + Overhead

Question 12

COGM

Answer 12

DM + DL + OH + dWork in Progress

Question 13

COGS

Answer 13

COGM + dEnding balance finished goods

Question 14

High-low

Answer 14

(High cost - Low cost) / (High purchase orders - Low purchase orders)

Question 15

FC

Answer 15

=TC-Var rate * X

Question 16

Operating Leverage

Answer 16

Total contribution margin / Operating income

Question 17

ROI

Answer 17

Operating income / Operating assets

Question 18

Absorption-Costing (full costing) ending inventory

Answer 18

Unsold units * Unit cost (with fixed OH, i.e. absorbs some of the fixed manufacturing costs in addition )

Question 19

Variable costing (direct costing) unit cost

Answer 19

Unsold units * Unit cost (less fixed OH)

Question 20

Residual income

Answer 20

OI - Minimum rate of return * Operating assets

Question 21

Operating income

Answer 21

Revenues - COGS - Operating expenses

Question 22

Contribution margin

Answer 22

(P-VC)*Units

Question 23

Break-Even (units)

Answer 23

FC/(P-VC)

Question 24

Target Profit (units)

Answer 24

(FC+TP)/(P-VC)

Question 25

Overhead rate

Answer 25

Overhead costs/Unit-level Driver (e.g. DL hours)