Management Accounting Flashcards
What is the break even calculation?
Fixed cost ÷ unit contribution
How do you find out how many units need to be sold to make the target profit?
Fixed cost + target profit
÷ unit contribution
How do you work out the margin of safety in units? and then in percentage?
budgeted sale units - break even units divide by budgeted sales x 100
What is the re-order level equation?
(average usage x average lead time) + inventory buffer
How to do you work out the Profit Volume (a.k.a contribution sales (CS) ratio)
Unit contribution ÷ selling price
(x 100 if you want percentage)
What is the contribution cost?
Selling price - variable costs
What does IAS 2 inventory require?
It requires absorption costing for financial statements
What is prime cost?
Direct materials cost + direct labour cost
What is Marginal costing?
focuses on the variable cost: prime cost + variable costs
What is the High Low for variable cost equation?
Difference in cost ÷ difference in unit
What is the economic order quantity (EOQ) equation?
√ 2 x annual usage x ordering cost ÷ inventory holding cost
What is the inventory buffer equation?
Reorder level - (average usage x average lead time)
How to work out length of cycle for INVENTORY DAYS
Inventories ÷ cost of sales x 365 (days)
How to work out length of cycle for RECEIVABLE DAYS
Receivables ÷ revenue x 365 (days)
How to work out length of cycle for PAYABLE DAYS
Payables ÷ cost of sales x 365 (days)
How to work out length of captial cycle
Inventory days + Receivable days - Payable days
How do you work out net cash flow?
Total receipts - total payments
What is the Contribution Sales (CS) Ratio?
Unit contribution ÷ unit selling price
What is the Overhead Recovery Rate equation?
Then what is the Overhead absorbed equation?
Budgeted overheads ÷ expected (chosen budget absorption e.g. labour hours)
Actual chosen absorption (e.g. labour hour) x ORR = overhead absorbed
How to layout journal for overheads absorbed
DEBIT - actual overheads
CREDIT - overheads absorbed
DEBIT - overabsorbed
CREDIT - underabsorbed
What is the High Low for fixed cost equation?
variable cost per unit x highest activity units
Maximum re-order quantity equation
Max inventory level - buffer inventory
Maximum inventory level equation
buffer inventory + maximum re-order quantity
Minimum re-order quantity
Average usage x average lead time
