Formulas Flashcards
Total variance (Flexible budget variance)
(AQ*AP) - (SQ*SP) AQ = actual quantity USED SQ = standard quantity USED
This variance can usually be explained by then calculating the price and efficiency variances.
*Do a check: price + efficiency variances should = flexible budget variance.
Price (rate) variance
(AP - SP) * AQ
Usage (efficiency) variance
(AQ-SQ)*SP
Unfavourable variance
when actual is greater than standard (budgeted)
CM
Sales - VC The incremental profit earned on the sale
CM ratio
CM / sales value
BE point units
FC / CM per unit
BE point $
FC / CM ratio
WACM when for multiple products.. what is WACM per unit
Total CM / Total units
WACM ratio
Total CM / Total sales
Sales mix
of products sold for model / total # of units
How many units of x are needed to sell to break even?
= BE units * sales mix of model
Target profit units
= (FC + TP) / CM per unit
Target profit $
= (FC + TP) / CM ratio
Cost function
TC = VCx + FC
