Total Cost = Direct Materials + Direct Labor + Manufacturing Overhead + Selling &

Administrative Expenses

Direct Materials Used = Beginning Direct Materials Inventory + Direct Materials

Purchases - Ending Direct Materials Inventory

Direct Materials Cost = Direct Materials Used

Direct Labor Cost = Direct Labor Hours × Direct Labor Rate per Hour

Manufacturing Overhead = Actual Manufacturing Overhead Costs Incurred

Manufacturing Overhead Variance = Actual Manufacturing Overhead Costs -

Applied Manufacturing Overhead

Prime Cost = Direct Materials Cost + Direct Labor Cost

Conversion Cost = Direct Labor Cost + Manufacturing Overhead

Cost of Goods Manufactured COGM = Direct Materials Used + Direct Labor Cost +
Manufacturing Overhead + Beginning Work in Process Inventory - Ending Work in
Process Inventory

Cost of Goods Sold COGS = Beginning Finished Goods Inventory + Purchased -

Ending Finished Goods Inventory

Marginal Cost = Change in Total Cost / Change in Output or Marginal Cost =

Variable Cost per Unit

Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit

Total Contribution Margin = Total Sales Revenue - Total Variable Costs

Marginal/Variable Cost = Variable Manufacturing Costs + Variable Selling &

Administrative Costs

Break-Even Point in Units = Fixed Costs / (Contribution Margin per Unit)

Break-Even Point in Sales Dollars = Fixed Costs / (Contribution Margin Ratio)

Where Contribution Margin Ratio = (Sales - Variable Costs) / Sales

High-Low Method for Cost Estimation:

Variable Cost per Unit = (Highest Total Cost - Lowest Total Cost) / (Highest
Activity Level - Lowest Activity Level)
Fixed Cost = Highest Total Cost - (Variable Cost per Unit × Highest Activity Level)
Regression Analysis for Cost Estimation:
y = a + bx where:

y = Total Cost

a = Fixed Cost (y-intercept)

b = Variable Cost per Unit (slope)

x = Activity Level