A324 Quiz 1 Equations

Operating Income
Revenues - COGS - Period Costs (EBIT)
Prime Costs
Direct materials costs + Direct manufacturing labor costs
Conversion Costs
Direct manufacturing labor costs + Manufacturing overhead costs
Contribution Margin
Revenues – Variable Costs
Contribution Margin per unit
Selling price - Variable cost per unit
Contribution Margin Percentage
Contribution margin per unit / Selling Price
Breakeven Number of Units
Fixed costs / Contribution margin per unit
Breakeven Revenues
Fixed costs / Contribution margin %
Quantity of Units Required to be sold
(Fixed costs + Target operating income) / (Contribution margin per unit)
Net Income
Operating income - Income taxes
Target Net Income
(Target operating income) * (1 - Tax rate)
Target Operating Income
Target net income / (1 - Tax rate)
Margin of Safety (revenues)
Target sales - Breakeven Sales
Margin of Safety (units)
Budgeted (or actual) sales quantity - Breakeven quantity
Margin of Safety Percentage
Margin of safety in dollars / Budgeted (or actual) revenues
Degree of Operating Leverage
Contribution margin / Operating income
Breakeven point in bundles
Fixed costs / Contribution margin per bundle
Contribution margin of the bundle
Contribution margin of the bundle / Revenue of the bundle
Budgeting Manufacturing Overhead Rate
Budgeted Manufacturing Overhead Costs / Budgeted Total Quantity of Cost-Allocation Base
Budgeted-Indirect cost rate
Budgeted annual indirect cost/(divided by) budgeted annual quantity of the cost allocation base
Equivalent Units
Costs of inputs ÷ quantity of output
Price Variance
(Actual price of input - Budgeted price of input) x Actual Quantity of output
Efficiency Variance
(Actual quantity of input used - Budgeted quantity of input allowed for actual output) x Budgeted price of input