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AAT Level 3 > Management Accounting > Flashcards

Management Accounting Flashcards

1
Q

What is the break even calculation?

A

Fixed cost ÷ unit contribution

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2
Q

How do you find out how many units need to be sold to make the target profit?

A

Fixed cost + target profit
÷ unit contribution

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3
Q

How do you work out the margin of safety in units? and then in percentage?

A

budgeted sale units - break even units divide by budgeted sales x 100

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4
Q

What is the re-order level equation?

A

(average usage x average lead time) + inventory buffer

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5
Q

How to do you work out the Profit Volume (a.k.a contribution sales (CS) ratio)

A

Unit contribution ÷ selling price
(x 100 if you want percentage)

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6
Q

What is the contribution cost?

A

Selling price - variable costs

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7
Q

What does IAS 2 inventory require?

A

It requires absorption costing for financial statements

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8
Q

What is prime cost?

A

Direct materials cost + direct labour cost

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9
Q

What is Marginal costing?

A

focuses on the variable cost: prime cost + variable costs

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10
Q

What is the High Low for variable cost equation?

A

Difference in cost ÷ difference in unit

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11
Q

What is the economic order quantity (EOQ) equation?

A

√ 2 x annual usage x ordering cost ÷ inventory holding cost

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12
Q

What is the inventory buffer equation?

A

Reorder level - (average usage x average lead time)

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13
Q

How to work out length of cycle for INVENTORY DAYS

A

Inventories ÷ cost of sales x 365 (days)

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14
Q

How to work out length of cycle for RECEIVABLE DAYS

A

Receivables ÷ revenue x 365 (days)

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15
Q

How to work out length of cycle for PAYABLE DAYS

A

Payables ÷ cost of sales x 365 (days)

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16
Q

How to work out length of captial cycle

A

Inventory days + Receivable days - Payable days

17
Q

How do you work out net cash flow?

A

Total receipts - total payments

18
Q

What is the Contribution Sales (CS) Ratio?

A

Unit contribution ÷ unit selling price

19
Q

What is the Overhead Recovery Rate equation?
Then what is the Overhead absorbed equation?

A

Budgeted overheads ÷ expected (chosen budget absorption e.g. labour hours)
Actual chosen absorption (e.g. labour hour) x ORR = overhead absorbed

20
Q

How to layout journal for overheads absorbed

A

DEBIT - actual overheads
CREDIT - overheads absorbed
DEBIT - overabsorbed
CREDIT - underabsorbed

21
Q

What is the High Low for fixed cost equation?

A

variable cost per unit x highest activity units

22
Q

Maximum re-order quantity equation

A

Max inventory level - buffer inventory

23
Q

Maximum inventory level equation

A

buffer inventory + maximum re-order quantity

24
Q

Minimum re-order quantity

A

Average usage x average lead time

AAT Level 3 (2 decks)

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