Important Formulae Flashcards
What is the formula for the ‘periodic weighted average price’?
(cost of opening inventory + total cost of receipts in period)
Over
(units in opening inventory + total units received in period)
What is the formula for the ‘overhead absorption rate’?
Production overhead
Over
Activity level
What is the formula for the ‘predetermined OAR’?
Budgeted overhead
Over
Budgeted activity level
What is the formula for the ‘overhead absorbed’?
Actual activity X Predetermined OAR
What is the formula for ‘under/(over) absorption’?
Actual overhead - overhead absorbed
What is the formula for ‘inventory turnover period’?
(Average inventory
Over
Cost of sales)
x365
What is the formula for ‘inventory turnover ratio’?
Cost of sales
Over
Inventory
What is the formula for ‘receivables collection period’?
(Average receivables
Over
Annual sales revenue)
x365
What is the formula for ‘payables payment period’?
(Average payables
Over
Annual purchases)
x365
What is the formula for the ‘current ratio’
Current assets
Over
Current liabilities
What is the formula for the ‘quick (liquidity/acid test) ratio’?
Current assets - inventories
Over
Current liabilities
What is the formula for the ‘raw materials holding period’?
(Average inventory of raw materials
Over
Annual usage (purchases))
x365
What is the formula for the ‘Average production period’?
(Average inventory of work in progress
Over
Annual cost of sales)
x365
What is the formula for the ‘average inventory holding period’?
(Average inventory of finished goods
Over
Annual cost of sales)
x365
What is the formula for ‘return on investment’?
(Controllable divisional profit
Over
Divisional capital employed)
x100
What is the formula for ‘residual income’?
Controllable profit - Imputed interest charge on controllable investment
What are the two formulas for the ‘break-even point’?
(Contribution required to breakeven
Over
Contribution per unit)
AND
(Total fixed costs
Over
Contribution per unit)
What is the formula for the ‘contribution ratio’?
(Contribution per unit
Over
Sales price per unit)
x100
What are the two formulas for ‘breakeven revenue’?
(Contribution required to break even
Over
Contribution ratio)
AND
(Fixed costs
Over
Contribution ratio)
What are the two formulas for the ‘margin of safety’?
Budgeted sales - breakeven sales
AND
(Budgeted sales - breakeven sales
Over
Budgeted sales)
x100
What is the formula for the ‘sales volume to achieve target profit’?
(Fixed costs + required profit
Over
Contribution per unit)
What are the two formulas for the ‘accounting rate of return’?
(Average annual accounting profit
Over
Initial investment)
x100
AND
(Average annual accounting profit
Over
Average investment)
x100
For the ‘accounting rate of return’ how would we find the average investment?
0.5 x (initial investment + final or scrap value)
