Equations
Cash payback period
Cash payback period = initial cost / annual net cash inflow
Cell conversion cost rate
Cell conversion cost rate = budgeted conversion cost / planned hours of production
Contribution margin
Contribution margin = sales - variable cost
Contribution margin ratio
Contribution margin ratio = contribution margin / sales
Contribution margin ratio
Contribution margin ratio = units contribution margin / unit selling price
Conversion cost per unit
Conversion cost per unit = total conversion costs for the period / total equivalent units of conversion costs
Cost amount per unit
Cost amount per unit = cost amount / estimated units produced and sold
Cost per equivalent unit
Cost per equivalent unit = total production costs / total in equivalent units
Activity rate
Activity rate = budgeted activity cost / Activity-Base usage
Actual direct labor cost
Actual direct labor cost = actual rate per hour x actual time
Actual direct materials cost
Actual direct materials cost = actual price x actual quantity
Applied factory overhead
Applied factory overhead = standard hours for actual units produced x total factory overhead rate
Desired profit
Desired profit = desired rate of return x total assets
Direct labor rates variance
Direct labor rates variance = (actual rate per hour - standard rate per hour) x actual hours
Direct labor time variance
Direct labor time variance = (actual direct labor hours - standard direct labor hours) x standard rate per hour
Direct materials cost per equivalent unit
Direct materials cost per equivalent unit = total direct materials cost for the period / total equivalent units of direct materials
Fixed cost
Fixed cost = total costs - (variable cost per unit x units produced)
Fixed factory overhead rate
Fixed factory overhead rate = budgeted variable overhead at normal capacity / normal productive capacity
Fixed factory overhead volume variance
Fixed factory overhead volume variance = (standard hours for 100% of normal capacity - standard hours for actual units produced) x fixed factory overhead rate
Normal selling price
Normal selling price = cost amount per unit + markup
Operating leverage
Operating leverage = contribution margin / income from operations
Percent change in income from operations
Percent change in income from operations = percent change in sales x operating leverage
Present value factor for an annuity of $1.00
Present value factor for an annuity of $1.00 = amount to be invested / equal annual net cash flows
Present value index
Present value index = total present value of net cash flow / amount to be invested
Production cost per unit
Production cost per unit = total product cost / estimated units produced and sold
Production department factory overhead rate
Production department factory overhead rate = budgeted department factory overhead / budgeted department allocation base
Profit margin
Profit margin = income from operations / sales
Rate of return on investment (ROI)
Rate of return on investment (ROI) = income from operations / invested assets
Sales (units)
Sales (units) = (fixed costs + target profit) / (units contribution margin)
Single plant wide factory overhead rate
Single plant wide factory overhead rate = total budgeted factory overhead / total budgeted plant wide allocation base
Standard and direct labor costs
Standard and direct labor costs = standard rate per hour x standard time
Standard direct materials cost
Standard direct materials cost = standard price x standard quantity
Target cost
Target cost = expected selling price - desired profit
Total cost per unit
Total cost per unit = total costs / estimated units produced and sold
Total costs
Total costs = (variable cost per unit x units produced) + fixed costs
Total factory overhead cost variance
Total factory overhead cost variance = actual factory overhead - applied factory overhead
Unit contribution margin
Unit contribution margin = sales per unit - variable cost per unit
Unit contribution margin per production bottleneck hour
Unit contribution margin per production bottleneck hour = units contribution margin / hours per unit in production bottleneck
Unit cost factor
Unit cost factor = (planned cost per unit - actual cost per unit) x actual units sold
Unit price factor
Unit price factor = (actual selling price per unit - planned and selling price per unit) x actual units sold
Value added ratio
Value added ratio = Value-Added lead time / total lead time
Variable cost per unit
Variable cost per unit = difference in total cost / difference in production
Variable cost per unit
Variable cost per unit = total variable cost / estimated units produced and sold
Variable factory overhead controllable variance
Variable factory overhead controllable variance = actual variable factory overhead - budgeted variable factory overhead
Variable factory overhead rate
Variable factory overhead rate = budgeted fixed overhead at normal capacity / normal productive capacity
Yield
Yield = quantity of material output / quantity of material input
Investment turnover
Investment turnover = sales / invested assets
Margin of safety
Margin of safety = (sales - sales at break-even point) / sales
Markup
Markup = cost amount per unit x markup percentage
Markup per unit
Markup per unit = market percentage x total cost per unit
Markup percentage
Markup percentage = (desired profit + total fixed costs and expenses) / total variable cost
Markup percentage
Markup percentage = (desired profit + total selling and administrative expenses) / total product cost
Markup percentage
Markup percentage = desired profit / total cost
Average investment
Average investment = (initial cost + residual value) / 2
Average rate of return
Average rate of return = estimated average annual income / average investment
Break even sales (dollars)
Break even sales (dollars) = fixed costs / contribution margin ratio
Break even sales (units)
Break even sales (units) = fixed costs / unit contribution margin
Budgeted variable factory overhead
Budgeted variable factory overhead = standard hours for actual units produced x variable factory overhead rate