Ops Mngt Flashcards
Residual Income
Step 1. Sales x ROA…this equals N.I.
Step 2. Sales/Asset Turn…this equals Tot Assets
Imputed Interest (given) x’s total assets MINUS N.I. is equal to R.I.
Dual Rate method
uses separate fixed-cost and variable-cost rates
OH eff variance
(Act q - Std q) x Std p
Residual Income
Net Op Income - (Avg Inv Cap x Imputed Interest)
Over/Under applied OH
UNDER applied means ACTUAL OH cost was MORE (greater than expected) and ACTUAL OH VOLUME was LESS than expected
Applied OH rate is estimated annual OH/cost driver
Absorption vs Direct costing calculation
IF you PRODUCE MORE than you sell, absorption method (GAAP accepted) yields MORE PROFIT.
Explanation: Absorption puts unsold item costs as Inventory, and they are expensed when sold
Variable (direct) method recognizes the full expenses at the beginning
Contribution Margin
Sales Price (per unit) - ALL variable costs (per unit)
x’s (above) by units sold gives CM in dollars.
PURCHASES CALC
BB+PURCH=EI+MATERIALS USED
PURCHASES=EI-BI+MATERIALS USED
PURCHASES=INV INCREASE+MATERIALS USED
COGS
BI+PURCH-EI
or
COGM - CHANGE IN F.G. INV (BINV - EINV)
COG MANUFACTURED
DM+DL+MAN.OH.APPLIED=TOT MAN COSTS
TOT MAN COSTS+BEG.WIP.INV-END.WIP.INV=COG MANUFACTURED
EU FOR WEIGHTED AVG
UNITS COMPLETED + NORMAL SPOIL + %ENDING WIP = EU
BEG UNITS + UNITS STARTED = UNITS ACCOUNTED FOR
TOTAL COSTS / EU = EQ COST PER UNIT
EQ COST PER UNIT X (UNITS COMPLETED + NORMAL SPOIL) = COST TRANSFERRED
Total Manufacturing Cost
DL incurred + OH applied + Materials used (BINV+PURCH-EINV)
Overheard incurred
Dep exp (on prod equipment) + Indirect production materials used + Indirect production labor used
OH Under/Applied and COGS
If OH is OVER applied, then COGS is OVER stated
Bring it all together
Man Costs Mat USED
DL INCURRED
OH APPLIED
COGM Man Costs
BWIP
(EWIP)
COGS COGM
BFG
(EFG)
