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29 Cards in this Set
- Front
- Back
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High Low Method - Formula for VC - Formula for FC |
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ROI Formula |
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Residual Income Formula |
RI = Profits - (Capital Employed x Cost of Capital %) |
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Economic Order Quantity (EOQ) Formula |
EOQ = √(2 CD) / H EOQ = √2x Cost of one order x Estimated usage / Cost of holding one unit |
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Marginal Costing Inventory Valuation |
Valued at Variable production cost only (No overheads) |
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Absorption Costing Inventory Valuation |
Inventory is valued at full production cost (including fixed overheads) |
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Cash Operating Cycle Formula |
Aggregated - Trade payables ('Suppliers credit period') = Cash operating cycle |
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Working Capital Questions |
Step 1 - Reduction = Annual credit sales (X / 360) Step 2 - Discount allowed (disc% x annual credit sales) Step 3- Profit - Cost = difference |
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Contribution Formula |
Contribution = Sales price - Variable cost |
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Breakeven Formula (units) |
BEP (Units) = Total fixed costs / Contribution per unit |
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Margin of Safety formula |
Margin of Safety = Expected sales volume - Breakeven sales volume I.e Margin of Safety = Actual cost - Budgeted Cost |
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Average Inventory Period Ratio |
Av. Inventory Period = Average Inventory / Cost of Sales x 365 |
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Inventory Turnover Ratio |
(No 365!) |
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Receivables collection period |
Av. Collection period = Average Receivables / Sales Revenue x 365 days |
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Payables payment period |
Av. Payables period = Average Payables / Cost of sales x 365 days |
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Current Ratio Formula |
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Quick Ratio Formula |
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Breakeven Point Formula |
Breakeven Point = Fixed costs / Contribution Ratio |
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Breakeven Sales Formula |
Breakeven Sales = Budget sales - Margin of Safety |
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Breakeven Sales Volume Formula |
Breakeven Sales Volume = Total FC / Contribution per unit |
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Internal Rate of Return (IRR) Formula |
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Discounted Payback period |
Payback period using discounted values |
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Optimum Transfer Price Formula |
Optimum TP = External market price - Cost savings with internal transfer |
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Variable costs Formula |
VC = Sales Revenue - Contribution |
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Profit formula |
Profit = Contribution - Fixed costs |
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Calculating Prime Cost |
Selling Price Less: Profit mark-up Total cost Less: Overhead = Prime Cost |
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Calculating Sales Revenue |
Sales Revenue x Increase % |
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Calculating number of units sold |
Number of units = VC total / VC per unit |
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Profit Margin Formula |
Profit Margin = Profit / Sales Revenue x 100% |
