formulas intra Flashcards
operating income?
sales - VC = CM - FC = operating income
unit CM?
= per unit selling price - per unit VC
total CM?
= unit CM * sales volume
CM as a % of selling price?
per unit CM / per unit selling price OR total CM / total sales
breakeven point (BE)? —> in units & $
BE in units = fixed cost / unit CM
BE in $ = BE in units * per-unit selling price
margin of safety —> in units & $
units = actual or expected sales(in # units) - BE in unit
in $ = actual or expected sales (in $) - BE in $
potential income?
(per unit CM * volume at MAX capacity) - FC
target income?
before tax = (FC + target income) / unit CM = # unit after tax= (FC + [target / (1-tx)] / unit CM = # unit
indifference point?
(SP1 - VC1)volume - FC1 = (SP2 - VC2)volume - FC2 => (CM1vol.) - FC1 = (CM2vol.) - FC2 FC1 - FC2 / CM1 - CM2 = Volume
controllable margin?
total CM - direct FC
CM per unit of limited resources?
per unit CM / # of units of limited resource required to manufacture the product
allocation rate (overhead rate)?
estimated annual MOH cost / estimated annual operating activity (using the allocation base ex: mh)
make or buy, elements to consider
situation 1 : FC are considered common (if common we do NOT take it into consideration)
situation 2 : FC are considered direct & indirect (we only consider the direct FC in an incremental analysis
situation 3 : calculate an opportunity cost (the diff. between make or buy alternatives, then you add those up to see the impact on income)
eliminate an unprofitable segment or product, elements to consider?
situation 1 : common FC ( will the FC still be there if we eliminate the product/segment?)
situation 2 : traceable and common FC (if any, controllable margin)
COGM schedule?
1) DM used
beg. DM
+ purchased DM
(-) end DM
2) COGM
beg. WIP
+ DM used + DL + MOH
(-) end WIP
income statement?
3) COGS
beg. finished goods (FG)
+ COGM
(-) end FG
4) income statement
sales
(-) COGS
= gross profit
(-) S & A
= operating income
minimum selling price
= total costs of special order / # of units in special order
what are relevant costs?
1) costs and revenues that differ for each alternative
2) cost and revenue that will occur in the future
(they must be both)
opportunity cost; when do we use it and what is the formula
when there is a capacity shortfall
units given up*CM of units given up
what is a sunk cost
it is a cost that can’t be recovered (ex: a deposit for an appointment that you can’t make last minute, therefore you can’t get the deposit back no matter the future decision)
