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ACCA (MA) > FORMULAS TO LEARN > Flashcards

FORMULAS TO LEARN Flashcards

1
Q

total cost of a semi variable cost (high low method)

A

Total costs = Total fixed costs + (Variable cost per unit × Activity level)

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2
Q

calculate vc per unit using the high low method

A

VCPU = cost at high activity - cost at low activity/high level activity - low level activity

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3
Q

total annual holding costs

A

Total annual holding cost = holding cost per unit of inventory (Ch) × average inventory (Q/2).

Where average inventory held is equal to half of the order quantity Q.

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4
Q

Toal annual ordering cost

A

Total annual ordering cost = cost of placing an order (Co) × number of orders (D/Q).
Where the number of orders in a year is expected annual demand D divided by the order quantity Q.

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5
Q

total annual cost of inventory

A

Total annual cost = PD + (Co × D/Q) + (Ch × Q/2)

The Total Annual Costs (TAC) is the total of purchasing costs P multiplied by annual demand D plus total ordering costs (Co × D/Q) and total holding costs (Ch × Q/2)

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6
Q

reorder level

A

Reorder level = Maximum usage × Maximum lead time

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7
Q

EOQ

A

GIVEN

D = Demand per annum
Co = Cost of placing one order
Ch = Cost of holding one unit for one year

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8
Q

EBQ

A

GIVEN

Q = Batch size
D = Demand per annum
Ch = Cost of holding one unit for one year
Co = Cost of setting up one batch ready to be produced
R = Annual replenishment rate

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9
Q

min/max inventory level

A

Minimum level = Re-order level – (Average usage × Average lead time)
Maximum level = Re-order level + Re-order quantity – (Minimum usage × Minimum lead time)

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10
Q

closing inventory valuation

A

Closing inventory valuation = Opening inventory + receipts – issues

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11
Q

AVCO cumulative weighted average price

A

cumulative weighted average price = total costs before issue/total number of units before issue

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12
Q

total wages

A

total wages = (total hours worked x basic rate of pay ph) + (overtime hours worked x overtime premium pay ph)

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13
Q

piecework wages

A

total wages = units produced x rate of pay per unit

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14
Q

premium bonus plans

A

if an employee receives 50% of time saved

bonus = (time allowed - time taken)/3 x time rate

employee is paid based on ratio of time taken to time allowed

bonus = time taken/time allowed x time rate x time saved

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15
Q

labour turnover

A

number of leavers who require replacement/average number of employees x 100

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16
Q

labour efficiency ratio

A

standard hours for actual output/actual hours worked to produce output x 100

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17
Q

idle time ratio

A

idle hours/total hours x 100

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18
Q

labour capacity ratio

A

actual hours worked to produce output/total budgeted hours x 100

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19
Q

labour production volume ratio (activity ratio)

A

standard hours for actual output/total budgeted hours x 100

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20
Q

Overhead absorption rate

A

OAR = budgeted production overhead/budgeted total of absorption basis

The absorption basis is most commonly units of a product, labour hours, or machine hours.

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21
Q

calculate under/over absorption

A

calculate OAR

OAR = budgeted overheads/budgeted level of activity

calculate overhead absorbed by actual activity

overheads absorbed = OAR x actual level of activity

compare absorbed to actual

if absorbed are less Han actual overheads then there is an under absorption

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22
Q

reconcile absorption/marginal costing profits

A

absorption costing profit >
(opening inv - closing inv) x OAR >
marginal costing

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23
Q

total contribution

A

contribution = sales price - all variable costs

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24
Q

batch costing (cost per unit in batch)

A

total production cost of batch/number of units in batch

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25
Q

process costing (average cost per unit)

A

average cost per unit = net costs of inputs/expected output

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26
Q

average cost per unit (normal loss and scrap value)

A

average cpu = (total cost of inputs - scrap value of normal loss)/input unit - normal loss units

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27
Q

balancing equation for abnormal gains and losses

A

input units + abnormal gain = output units + normal loss

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28
Q

expected output (process costing)

A

output = input units - normal loss units

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29
Q

normal loss units

A

normal loss units = % normal loss x input

30
Q

cost per unit for by products

A

(process costs materials & conversion - scrap value of normal loss - sales value of by product)/ (input units - normal loss units - by products)

net costs of inputs/expected outputs

31
Q

cost per service unit

A

cost per service unit = total costs for providing the service/number of service units used to provide the service

32
Q

coefficient of variation

A

standard deviation/mean

33
Q

expected value

A

EV = sum of PX

P = probability of outcome
X = the outcome

34
Q

standard normal distribution

A

z = (x - u)/o

z = the score
x = value being considered
u = the mean
o = the standard deviation

35
Q

formula for a (y intercept)

A

a = sum of y/n - (b x sum of x)/n

y = dependent variable
n = number of pairs of data
b = gradient
x = independent variable

35
Q

simple price/quantity index

A

simple price index = p1/p0 x 100

simple quantity index = q1/q0 x 100

0 = price/quantity at time 0
1 = price/quantity at time 1

36
Q

chain base index

A

chain base index = this years value/last years value x100

37
Q

Laspeyre index

A

price index = sum of (current year price x base year quantity)/sum of (base year price x base year quantity)

quantity index = sum of (current year quantity x base year price)/sum of (base year quantity x base year price) x100

38
Q

paasche index numbers

A

price index = sum of (current year price x current year quantity)/sum of (base year price x current year quantity) x100

quantity index = sum of (current year quantity x current year price)/sum of (base year quantity x current year price) x100

39
Q

budgeted production levels

A

forecast sales - opening inv + closing inv = budgeted production in units

40
Q

material purchases budget

A

forecast material usage - opening inv of raw material + closing inv of raw material = material purchases budget

41
Q

formula for compounding

A

v = X(1+ r)^n

v = future value
x = initial investment (present value)
r = interest rate (decimal)
n = number of time periods

42
Q

formula for effective interest rate

A

r = (1 + I/n)^n -1

r = effective interest rate
I = nominal interest rate
n= number of time periods

43
Q

formulas for discounting

A

present value = future value x discount factor

discount factor = 1/(1+r)^n or (1+r)^-n (GIVEN)

r = the interest rate as a decimal
n = number of time periods

44
Q

payback period

A

initial investment/annual cash inflow

45
Q

internal rate of return IRR

A

IRR = L + NL/(NL - NH) X (H-L)

L= lower rate of interest
H = higher rate of interest
NL = NPV at lower rate of interest
N = NPV at higher rate of interest

46
Q

NPV using annuity factor AF

A

PV = annual cash flow x AF
AF = (1-(1+ r)^-n)/r

can also find using the table in exam, find the DF at the % rate column

47
Q

NPV and IRR formula using perpetuities

A

PV = cashflow/r

or

PV = cash flow x 1/r

IRR of a perpetuity = annual inflow/initial investment x 100

48
Q

sale volume variance

A

(actual q sold - budget q sold) x standard margin

standard margin is the standard cpu (marginal), or standard profit pu (absorption)

49
Q

sales price variance

A

(actual price - budget price) x actual q sold

50
Q

material price/usage variance

A

material price variance = (actual q bought x actual p) - (actual q bought x standard price)

material usage variance = (actual q used x standard p) - (standard q used for actual production x standard price)

51
Q

Labour/overheads/materials total variance

A

total of rate and efficiency variances

rate variance = (actual hours x actual rate) - (actual hours x standard rate)

efficiency variance = (actual hours x standard rate) - (standard hours x standard rate)

52
Q

fixed overhead expenditure variance in absorption costing

A

fixed overhead expenditure variance = actual expenditure - budget expenditure

fixed overhead volume variance - (actual units x OAR) - budgeted expenditure

52
Q

fixed overhead capacity and efficiency variances

A

capacity variance = (actual hours x OAR per hour) - budget expenditure

efficiency variance = (standard hours for actual production x OAR per hour) - (actual hours x OAR per hour)

53
Q

ROCE

A

= operating profit/(non current liabilities + equity)

54
Q

ROS

A

return on sales = operating profit/revenue

55
Q

gross margin

A

= gross profit/revenue

56
Q

asset turnover

A

= revenue/capital employed

57
Q

ROCE/ROS/Asset turnover formula

A

ROCE = ROS x Asset turnover

58
Q

current ratio

A

= current assets/current liabilities

59
Q

acid test (quick ratio)

A

= (current assets - inventory)/current liabilities

60
Q

inventory holding period

A

= inventory/cost of sales x 365

61
Q

receivables collection period

A

= receivables/credit sales x 365

62
Q

payable payment period

A

= payables/credit purchases x 365

63
Q

capital gearing (leverage)

A

= non current liabilities (debt)/ordinary shareholders funds (equity)

or

= non current liabilities/(non current liabilities +equity)

64
Q

interest cover (income gearing)

A

= operating profit/finance cost

65
Q

ROI

A

= controllable profit/controllable capital employed x 100

66
Q

residual income RI

A

= controllable profit - notional interest on capital

67
Q

production volume ratio

A

= actual output measured in standard hours/budgeted production hours x 100

68
Q

capacity ratio

A

= actual production hours worked/budgeted production hours x 100

69
Q

efficiency ratio

A

= actual output measured in standard hours/actual production hours worked x 100

70
Q
A

ACCA (MA) (17 decks)

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