Formula Sheet - Beginning FG Inventor

Formulas Beginning FG Inventory + Cost of Good Manufactured – Ending FG Inventory = COGS (for a Manufacturing facility) Beginning Inventory + Purchases – Ending Inventory = COGS (Retailer) Raw Materials Beginning Inventory + Raw Materials Purchased – Raw Materials Ending Inventory = Direct Materials Used in Mfg (if raw material withdrawn from use as indirect materials, that should also be subtracted.) Direct Materials + Direct Labor + Manufacturing Overhead = Total Manufacturing Cost Beginning WIP Inventory + Total Manufacturing Cost – Ending WIP Inventory = Cost of Goods Manufactured (NOT Cost of Goods SOLD) Predetermined Overhead Rate or Activity Rate = Estimated Overhead / Estimated Quantity Base or Activity Overhead Applied = Actual Quantity of Base or Activity x Predetermined Overhead Rate or Activity Rate (may repeat several times where multiple departments or activity based costing) Overhead Applied – Actual Overhead = (Underapplied) / Overapplied Overhead Variable Cost Behavior: As activity increases (decreases) in relevant range, Total Variable Costs increase (decrease), Variable Cost/Unit remains same. Fixed Cost Behavior: As activity increases (decreases) in relevant range, Total Fixed Costs remain the same, Fixed Cost/Unit decreases (increases). Total Cost = Fixed Cost + Variable cost Total Cost per Unit = Total Cost/ # Units Variable Cost per unit = Total Variable Costs / # Units Fixed Cost per Unit = Total FC / # Units High low method: Subtract low TC from high TC, Subtract low # units from high # units, divide change in TC by change in units to get VC/unit. Substitute into Total Cost Formula above to arrive at Fixed Cost, allow statement of overall formula. Apply formula to a given level of activity. Br e akEv e ni nUni t s=Fi x e dEx pe ns e s / Cont r i but i onMa r gi np e rUni t Br e akEv e ni nSa l e s=Fi x e dExp e ns e s / Cont r i but i o nMa r gi nRa t i o Cont r i but i onMar gi n=Sa l e s–Va r i a bl eEx pe ns e s Ne tOpe r a t i ngI nc ome=Cont r i but i onMa r gi n–Fi x e dExp e ns e s Cont r i but i onMar gi nRa t i o= ( e xp r e s s e da sde c i ma lor%) Cont r i but i onMa r gi npe run i t Sa l e sPr i c epe runi t CM r at i o=Cont r i but i onma r gi n÷Sa l e s Cont r i but i onMar gi nratio = 1 - Variable expense ratio Var i abl eExpe ns er a t i o= Variable Expenses ÷Sa l e s Var i abl eExpe ns er a t i o= 1 - Cont r i but i o nMa r gi nratio Mar gi no fSaf e t y=Tot a lSa l e s–Br e a kEv e nSa l e s Mar gi no fs a f e t ype r c e nt ag e= Margin of safety in dollars ÷ Total actual sales De gr e eofOpe r at i ngLe v e r ag e=Cont r i but i onMa r gi n / Ne tOpe r a t i ngI nc ome Equi v al e ntUni t sofPr oduc t i on=Uni t st r a ns f e r r e dout+e qui v a l e ntun i t si nEnd .WI PI n v e nt or y ( We i ght e dAv e r a g eMe t hod ) Cos tofEqui v .Uni t s=Cos ti nBe gWI PI n v e nt or y+Cos t sAdde ddu r i ngPe r i od( WAme t hod ) Cos tpe rEqui v al e ntUni t=Cos tEq ui vUni t s/Eq ui vUni t s( WAMe t hod ) Endi ngUni t s=Be gi nn i n gUni t s+Uni t sTr a ns f e r r e dI n–Uni t sTr a ns f e r r e dOut Be gi nni n gUni t s+Uni t sSt a r t e d( ort r a ns f e r r e di n )=En di n gUni t s+Uni t sc ompl e t e da ndt r a ns f e r r e dout Uni t ss t ar t e di nt opr oduc t i ono rt r ans f e r r e di n=En di n gUni t s+Uni t sc ompl e t e da ndt r a ns f e r r e doutBe gi nni n gwor ki np r oc e s si n v e nt o r y Tot a lCont r i but i onMar gi n=Sa l e sxCont r i b ut i onMa r gi nRa t i o