P1.B.5 Annual Profit Plan & Supporting Schedules Flashcards
Contribution Margin Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Sales - Less: variable costs = Equals: contribution margin - Less: fixed expenses = Equals: operating income
Name all components of an Operating Budget
P1.B.5 Annual Profit Plan & Supporting Schedules
- Sales Budget
- Production Budget
3a. Direct Materials Usage Budget
3b. Direct Materials Purchase Budget
3c. Direct Labor Budget
3d. Manufacturing Overhead Cost Budget - COGS Budget
- Selling & Administrative Expense Budget
- Budgeted Income Statement
- Cash Budget: Financial budget
Sales Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
- Projected units to be sold
- Projected sales price per unit
- # of units x sales price per unit = total sales
- Foundation of annual profit plan
Production Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
of units to be produced to satisfy sales forecast
Desired ending inventory \+ Add: projected unit sales = Equals: goods available for sale - Less: beginning inventory = Equals: total production units
Direct Materials Purchase Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Total direct materials needed for production
+ Add: desired ending inventory (% of production needs)
= Equals: total direct materials available for production
- Less: direct materials beginning inventory
= Equals: total # of direct materials to purchase
x Multiply: purchase price per unit
= Equals: total cost of direct material purchases
Direct Material Usage Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Units to be purchased
x Multiply: required # materials per unit
= Equals: total materials needed for production
x Multiply: purchase price per unit
= Equals: total cost needed for production
Direct Labor Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Units to be produced x Multiply: required # of hours per unit = Equals: total hours needed for production x Multiply: rate per hour = Equals: labor cost
Manufacturing Overhead Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Total hours needed for production
x Multiply: variable overhead rate per hour
= Equals: total variable overhead costs
+ Add: total fixed overhead costs
= Equals: total manufacturing overhead costs
COGS Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Estimated cost of beginning inventory \+ Add: manufacturing costs = Equals: total cost of goods available for sale - Less: ending inventory = Equals: total COGS
Selling & Administrative Expense Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Budgeted sales in units x Multiply: variable expense per unit = Equals: total variable expense \+ Add: fixed expense = Equals: total selling & administrative expense
Cash Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Change in cash = receipts - payments
Beginning cash \+ Add: cash receipts - Less: cash disbursements \+ Add: minimum required = Equals: total cash needed
Borrowings: borrowings + repayment + interest expense = total effects of financing
High- Low Method Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Separates fixed & variable components
Variable cost per unit
= Difference of cost between high and low levels of activity/ Difference of high and low activity levels
Fixed
Total cost = variable + fixed costs
Fixed = total cost - variable costs
Fixed = total cost - cost driver x variable cost per unit
Proforma Income Statement Budget Formula
P1.B.5 Annual Profit Plan & Supporting Schedules
Sales - Less: manufacturing costs (COGS) \+ Add: beginning inventory - Less: ending inventory = Equals: gross profit - Less: selling & administrative expense = Equals: income before taxes - Less: income tax expense = Equals: net income
