management accounting Flashcards
fixed cost d
costs that do not change with output
semi variable costs d
costs with a fixed element as well as a variable element
unit contribution equation
selling price - unit variable cost
total contribution equation
total revenue - total variable cost
total profit equation using contribution
profit = contribution per unit x number of units - fixed costs
number of units for profit equation
(fc+profit) / contribution per unit
breakeven point equation
fixed cost / contribution per unit
margin of safety equation
margin of safety = budgeted sales - breakeven point,
as a percentage just divide by budgeted sales and times by 100
contribution / sales ratio
contribution per unit / selling price per unit
assumptions of breakeven analysis
fixed costs are constant not stepped,
variable cost per unit is constant,
selling price per unit doesn’t change
what do you do with sunk and opportunity costs in relevant costing
ignore sunk costs,
include opportunity costs
what is a relevant cost defined ass
future, incremental, cash flow
formula for calculating annuities
1/r(1-1/(1+r)^n),
then multiply by the cash amount
criteria for calculating annuities
repeated cash flow which is the same amount,
first payment has to be in a years time
formula for calculating perpetuities and what is it
annuity that lasts forever,
as n gets increasingly large from annuity formula it becomes 1/r ,
(first cash flow has to be in a years time)
