Formulas for ACTG Final

Question 1

Variable Costs

Answer 1

Variable Costs
Slope of Line
change in cost / change in units

Question 2

Cost - Volume - Profit Analysis

Answer 2

The Profit Equation
Profit = Sales price(x)-Variable cost(x)-Total fixed cost
(Solve for Profit at x qty)

Question 3

Cost - Volume - Profit Analysis

Break Even Point

Answer 3

Break Even Point
Profit at ZERO = Sales price(x)-Variable cost(x)-Total fixed cost
(Solve for x for profit at 0)

Question 4

Margin of Safety

Answer 4

Margin of Safety

Projected sales - Break even sales

Question 5

Contribution Margin

Answer 5

Contribution Margin- Sales price minus VC
Profit = (Sales price-Variable cost)(x)-Total fixed cost
Profit = (Contribution Margin)(x)-Total fixed cost

Question 6

Contribution Margin Ratio

Answer 6

Contribution Margin Ratio
CM Ratio = Sales price - VC / Sales price

Sales = Profit + TFC / CM ratio

Question 7

Taxes in CVP

Answer 7

After Tax profit = Sales price(x)-Variable cost(x)-Total fixed cost

Question 8

Multi-Product Analysis using Weighted Average CM

Answer 8

Multi-Product Analysis using Weighted Average CM

x(SP1) + y(SP2) / x+y

Question 9

Break Even Point (in Units)

Answer 9

Break Even Point (in Units)

FC / Weighted Average CM per unit

Question 10

Multi-Product Analysis using CM Ratio

Answer 10

Multi-Product Analysis using CM Ratio
1. Calculate Break Even Point
2. Calculate CM Ratio
Multi-product BEP = BEP / CMR
(Details- Chapter 4, Learning Objective 3)

Question 11

Operating Leverage

Answer 11

Operating Leverage

Operating Leverage = CM / profit

Question 12

Internal Rate of Return

Answer 12

Internal Rate of Return

IRR = Initial Outlay / Annuity amount

Question 13

Accounting Rate of Return

Answer 13

Accounting Rate of Return

ARR = Average Net Income / Average Investment

Question 14

Production Budget

Answer 14

Production Budget

Finished Units to Produce = Expected sales units + Desired ending inventory - Beginning inventory

Question 15

Direct Material Purchase Budget

Answer 15

Direct Material Purchase Budget

Required Direct Materials = Amount needed for production + Desired ending inventory - Beginning inventory

Question 16

Material Price Variances

Answer 16

Material Price Variances

(AP - SP)AQ^p
AP - Actual price
SP- Standard price per unit
AQ- Actual quantity

Question 17

Material Quantity Variances

Answer 17

Material Quantity Variances

(AQ^u - SQ)SP
AQ^u- Actual quantity Used
SQ - Standard quantity
SP- Standard price per unit

Question 18

Direct Labor Variances

Answer 18

Direct Labor Variances (by rate or hours)

(AR - SR) AH

Question 19

Controllable Overhead Variance

Answer 19

Controllable Overhead Variance

Actual overhead - Flex budget of overhead

Question 20

Overhead Volume Variance

Answer 20

Overhead Volume Variance

Flex budget of overhead - Overhead applied to production at standard rate