Summary of Important Equations Chapter 2 1. Total Product Cost = Direct Materials + Direct Labor + Manufacturing Overhead Total Product Cost 2. Per-Unit Product Cost = ‘Number of Units Produced 3. Prime Cost = Direct Materials + Direct Labor 4. Conversion Cost = Direct Labor + Manufacturing Overhead 5. Beginning Ending Inventory + Purchases — Inventory of Materials of Materials 6. Gross Margin = Sales Revenue - Cost of Goods Sold 7. Operating Income = Gross Margin ~ Selling and Administrative Expense Chapter 3 1. Total Variable Costs = Variable Rate x Units of Output 2. Total Cost = Total Fixed Cost + Total Variable Cost 3. Total Cost = Total Fixed Cost + (Variable Rate x Units of Output) High Point Cost — Low Point Cost igh Point Output ~ Low Point Output 8. Fixed Cost = Total Cost at High Point ~ (Variable Rate x Output at High Point) 6. Fixed Cost = Total Cost at Low Point ~ (Variable Rate x Output at Low Point) : 4. Variable Rate =x Output at Low Point) Chapter 4 Income = (Price x Number of Units Sold) one © (Variable Cost per Unit x Number of Units Sold) — Total Fixed Cost Total Fixed Cost os = on Fed Oe 2. Break-Even Units = 7 Variable Cost per Unit 3, Sales Revenue = Price x Units Sold __ Total Variable Cost 4. Variable Cost Ratio = ae Unit Variable Cost 5. Variable Cost Ratio = UE SETEE SOS Total Contribution Margin 6. Contribution Margin Ratio = n= al Contribution Margin 7. Contribution Margin Ratio Talore ree ___Total Fixed Expenses 8. Break-Even Sales = Copeibution Margin Ratio 9. Margin of Safety = Sales ~ Breakeven Sales . Total Contribution Margin 10, Degree of Operating Leverage = ee re 11. _ Percentage Change in Profits = Degree of Operating Leverage x Percent Change in Sales Chapter 5 i; Prodeiermined Gyerlical Wake = hemmed Atel Ovethead_ Eximated Annual Activity Level 2 Applied Overhead = Predetermined Overhead Rate x Actual Activity Level Total Normal Product Costs = Actual Direct Materials + Actual Direct Labor + Applied Overhead Overhead Variance = Actual Overhead — Applied Overhead Adjusted COGS = Unadjusted COGS + Overhead Variance (Note: Applied Overhead > Actual Overhead Overhead; subtract from COGS means OnerpptApplied Overhead < Actual Overhead means Underapplied Overhead; add to COGS) 6. Departmental Overhead Rate Estimated Department Overhead ~ Estimated Departmental Activity Level Chapter 6 : Total Cost 1. Unit Cost = 5 Givalent Units 2. Units Started and Completed = Total Units Completed — Units Units Started = Units Started and Completed + Units in EWIP Chapter 7 1. Consumption Ratio = ATount of Activity Driver per Produc Total Driver Quanti Total Overhead Costs 2. Overh = _ Total Overhead Costs _ srhead Rate = FT Direct Labor Hours