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Name: ___________________ _____ Student Number:_____________

Final Exam Formula Summary

1. Predetermined overhead rate = Estimated total manufacturing overhead costs/ Estimated total units in the allocation base

2. Overhead applied to a particular job = Predetermined overhead rate x Amount of allocation base incurred by job

3. Unit product cost = Total manufacturing cost (including overhead)/ Total units produced

4. Equivalent units = Number of partially completed units x percentage completion

Weighted average method of process costing:

5. Equivalent units of production = Units transferred to the next department or finished goods + Equivalent units in ending work in process inventory

6. Cost per equivalent unit = Cost of beginning WIP + Costs added during the period

Equivalent units of production

7. Activity rate = Total cost in cost pool / total activity level

8. Indirect costs applied to cost object = Activity rate x Activity level incurred by cost object

9. Total flexible budget variance = Price variance – Quantity variance Actual quantity of inputs = AQ Actual Price = AP

Standard quantity of inputs = SQ Standard price = SP

10. Price variance = (AQ x AP) – (AQ x SP)

a. Use this formula for Materials price variance, Labour rate variance and Variable overhead spending variance

11. Quantity variance = (AQ x SP) – (SQ x SP)

a. Use this formula for Materials quantity variance, Labour efficiency variance and Variable overhead efficiency variance

12. Direct materials variances when the amount purchased differs from amount used:

a. Price variance = (AQ x AP) – (AQ x SP)

b. Quantity variance = (AQ x SP) – (SQ allowed for actual output x SP)

13. Predetermined overhead rate = Overhead from flexible budget at denominator level of activity/ Denominator level of activity

14. Applied overhead costs in a standard costing system = Standard hours allowed for actual output x Predetermined overhead rate

15. Total fixed overhead variance = Budget variance + Volume variance

16. Budget variance = Actual fixed overhead cost – Flexible budget fixed overhead csot

17. Volume variance =Flexible budget fixed overhead cost – Fixed overhead cost applied to WIP

= Fixed portion of the predetermined overhead rate x (denominator hours standard hours allowed)

18. Return on Investment = Operating income / Average operating asset

19. Return on Investment = Margin x Turnover

= Operating Income x Sales

Sales Average operating assets

20. Residual income= Operating income – (Average operating assets x min req’d rate of return)

21. Selling price in cost plus pricing = Cost + (Markup percentage x cost)

22. Markup % on absorption cost = (Required ROI x Investment) + Selling and admin expenses

Unit sales x Unit product cost

23. Markup % on total variable cost = (Required ROI x Investment) + Total fixed expenses

Unit sales x Unit total variable costs

24. Current ratio = Current Assets / Current Liabilities

25. Quick ratio = (Current Assets – Inventory – Prepaid Expenses) / Current Liabilities

26. Receivables turnover = Credit Sales / Average Accounts Receivable

27. Average collection period = Average Accounts Receivable / (Credit Sales / 365)

28. Inventory turnover = Cost of Goods Sold / Average Inventory

29. Inventory period = Average Inventory / (Cost of Goods Sold / 365)

30. Gross margin ratio = (Sales - Cost of Goods Sold) / Sales

31. Profit margin ratio = Net Income / Sales

32. Return on assets = Net Income / Average Total Assets

33. Return on equity = Net Income / Average Equity

34. Debt ratio = Total Liabilities / Total Assets

35. Debt-to-equity = Total Liabilities / Equity

36. Debt service coverage = Net operating income / (Principal + Interest payments)

37. Times interest earned = EBIT / Interest Expense

38. Asset turnover = Sales / Average Total Assets

39. Asset turnover in days = 365 / (Sales / Average Total Assets)

40. Accounts Payable turnover = Purchases / Average Accounts Payable

41. Days payable outstanding = Average Accounts payable / (Cost of Goods Sold / 365)

42. Price earnings = Market Price of Shares / Earnings per Share

43. Dividend Payout = Yearly dividend per share / Earnings per share OR Dividends / Net income