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Management Information > Important Formulae > Flashcards

Important Formulae Flashcards

1
Q

What is the formula for the ‘periodic weighted average price’?

A

(cost of opening inventory + total cost of receipts in period)

Over

(units in opening inventory + total units received in period)

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2
Q

What is the formula for the ‘overhead absorption rate’?

A

Production overhead

Over

Activity level

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3
Q

What is the formula for the ‘predetermined OAR’?

A

Budgeted overhead

Over

Budgeted activity level

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4
Q

What is the formula for the ‘overhead absorbed’?

A

Actual activity X Predetermined OAR

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5
Q

What is the formula for ‘under/(over) absorption’?

A

Actual overhead - overhead absorbed

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6
Q

What is the formula for ‘inventory turnover period’?

A

(Average inventory

Over

Cost of sales)

x365

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7
Q

What is the formula for ‘inventory turnover ratio’?

A

Cost of sales

Over

Inventory

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8
Q

What is the formula for ‘receivables collection period’?

A

(Average receivables

Over

Annual sales revenue)

x365

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9
Q

What is the formula for ‘payables payment period’?

A

(Average payables

Over

Annual purchases)

x365

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10
Q

What is the formula for the ‘current ratio’

A

Current assets

Over

Current liabilities

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11
Q

What is the formula for the ‘quick (liquidity/acid test) ratio’?

A

Current assets - inventories

Over

Current liabilities

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12
Q

What is the formula for the ‘raw materials holding period’?

A

(Average inventory of raw materials

Over

Annual usage (purchases))

x365

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13
Q

What is the formula for the ‘Average production period’?

A

(Average inventory of work in progress

Over

Annual cost of sales)

x365

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14
Q

What is the formula for the ‘average inventory holding period’?

A

(Average inventory of finished goods

Over

Annual cost of sales)

x365

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15
Q

What is the formula for ‘return on investment’?

A

(Controllable divisional profit

Over

Divisional capital employed)

x100

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16
Q

What is the formula for ‘residual income’?

A

Controllable profit - Imputed interest charge on controllable investment

17
Q

What are the two formulas for the ‘break-even point’?

A

(Contribution required to breakeven

Over

Contribution per unit)

AND

(Total fixed costs

Over

Contribution per unit)

18
Q

What is the formula for the ‘contribution ratio’?

A

(Contribution per unit

Over

Sales price per unit)

x100

19
Q

What are the two formulas for ‘breakeven revenue’?

A

(Contribution required to break even

Over

Contribution ratio)

AND

(Fixed costs

Over

Contribution ratio)

20
Q

What are the two formulas for the ‘margin of safety’?

A

Budgeted sales - breakeven sales

AND

(Budgeted sales - breakeven sales

Over

Budgeted sales)

x100

21
Q

What is the formula for the ‘sales volume to achieve target profit’?

A

(Fixed costs + required profit

Over

Contribution per unit)

22
Q

What are the two formulas for the ‘accounting rate of return’?

A

(Average annual accounting profit

Over

Initial investment)

x100

AND

(Average annual accounting profit

Over

Average investment)

x100

23
Q

For the ‘accounting rate of return’ how would we find the average investment?

A

0.5 x (initial investment + final or scrap value)

Management Information (1 decks)

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