Midterm 2 Formulas

Question 1

What is the formula for Cost of Goods Manufactured (COGM)?

Answer 1

COGM = Beginning WIP Inventory + Total Manufacturing Costs - Ending WIP Inventory
Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead

Question 2

What is the formula for Conversion Costs?

Answer 2

Conversion Costs = Direct Labor + Manufacturing Overhead

Question 3

What is the formula for Prime Costs?

Answer 3

Prime Costs = Direct Materials + Direct Labor

Question 4

How do you calculate the break-even point in units?

Answer 4

Break-even Units = Total Fixed Costs / Contribution Margin per unit

Question 5

How do you calculate the break-even sales in dollars?

Answer 5

Break-even Sales = Total Fixed Costs / Contribution Margin Ratio

Question 6

What is the formula for Contribution Margin Ratio?

Answer 6

Contribution Margin Ratio = (Selling Price per Unit - Variable Cost per Unit) / Selling Price per Unit

Question 7

What is the formula for Margin of Safety in dollars?

Answer 7

Margin of Safety = Actual Sales - Break-even Sales

Question 8

How do you calculate the Variable Cost per Unit using the High-Low Method?

Answer 8

Variable Cost per Unit = (Cost at Highest Volume - Cost at Lowest Volume) / (Highest
Volume - Lowest Volume)

Question 9

How do you calculate Total Fixed Costs using the High-Low Method?

Answer 9

Total Fixed Costs = Total Cost - (Variable Cost per Unit × Units Produced)

Question 10

What is the formula for the Predetermined Overhead Rate?

Answer 10

Predetermined Overhead Rate = Estimated Total Manufacturing Overhead Costs / Estimated Total
Activity Base

Question 11

What is the formula for Equivalent Units of Production (EUP)?

Answer 11

EUP = Units Transferred Out + (Ending WIP Units × Percentage of Completion)

Question 12

What is the formula for Cost per Equivalent Unit for Direct Materials?

Answer 12

Cost per EUP for Direct Materials = Total Direct Materials Costs / Total Equivalent Units for Direct
Materials

Question 13

What is the formula for Cost per Equivalent Unit for Conversion Costs?

Answer 13

Cost per EUP for Conversion Costs = Total Conversion Costs / Total Equivalent Units for
Conversion Costs

Question 14

How do you calculate the Degree of Operating Leverage?

Answer 14

Degree of Operating Leverage = Contribution Margin / Income

Question 15

What is the formula for Target Costing?

Answer 15

Target Cost = Market Price - (Market Price × Desired Profit Margin)

Question 16

What is the formula for Contribution Margin?

Answer 16

Selling Price Per Unit - Variable Costs Per Unit

Question 17

What is the formula for Margin of Safety in Percent?

Answer 17

Expected Sales - Break Even Sales / Expected Sales

Question 18

What is the formula for Dollar Sales at Target Income

Answer 18

Fixed costs + Target Income / Contribution Margin Ratio

Question 19

Unit sales at Target income

Answer 19

Fixed costs + Target income / Contribution Margin Per Unit

Question 20

Change in Income (%)

Answer 20

DOL x Change in sales (%)

Question 21

Predetermined Overhead Rate

Answer 21

Est. Overhead costs / Est. activity base

Question 22

Applied Overhead

Answer 22

Predetermined Overhead Rate x Actual activity base used

Question 23

Plant-wide Overhead rate

Answer 23

Budgeted overhead cost - Budgeted allocation base

Question 24

Allocated cost per unit

Answer 24

plant-wide overhead rate x DLH used

Question 25

Departmental Overhead rate

Answer 25

budgeted departmental overhead cost / budgeted departmental allocation base

Question 26

Activity cost

Answer 26

budget activity cost / budget activity usage

Question 27

Allocated cost

Answer 27

actual activity usage x activity rate