Formulas

Question 1

Return on Investment

Answer 1

After-tax Income / Divisional Assets

Question 2

Residual Income

Answer 2

After-tax Income - (Cost of capital * Divisional Assets)

Question 3

EVA

Answer 3

1. Adjusted Profit= Divisional Income + R&D * (years)
2. Adjusted Investment= Divisional Investment + R&D * (years) - Current Liabilities
3. EVA= Adjusted Profit - Cost of Capital * Adjusted Investment

Question 4

The Basic Flow Model

Answer 4

Beginning Balance + Transfers IN - Transfers OUT = Ending Balance

Question 5

Predetermined Overhead Rate

Answer 5

Estimated Overhead / Estimated Allocation Base

Question 6

Value Cost of Goods Sold

Answer 6

(((Inventories + Transferred direct materials * Purchased materials + Direct Labor Costs + Indirect Labor Costs + Manufacturing Overhead) * Completed WIP) * Sold Completed Goods)

Question 7

Value Cost of Goods Sold, using Proration

Answer 7

1. Determine if it’s under or over-applied.
2. Calculate the new value.

3.

Question 8

Applied Overhead

Answer 8

Actual direct costs * POH

Question 9

Overapplied/Underapplied

Answer 9

Actual Manufacturing Overhead - Applied Overhead

Question 10

Price Variance

Answer 10

(Actual Price - Standard Price) * Actual Quantity

Question 11

Standard Costs

Answer 11

Standard Price * Standard Quantity

Question 12

Efficiency Variance

Answer 12

Standard Price * (Actual Quantity - Standard Quantity)

Question 13

Total Variance

Answer 13

Price Variance - Efficiency Variance

Question 14

Production Volume Variance

Answer 14

(Actual Quantity - Standard Quantity) * Standard Overhead / Standard Quantity

Question 15

Equivalent Units

Answer 15

Completed Goods + (Standard Goods - Completed Goods) * Ending WIP

Question 16

Cost per Unit

Answer 16

(Materials + Conversion costs) / Equivalent Units

Question 17

Finished Goods

Answer 17

Cost per Unit * Completed Goods

Question 18

Sales Price Variance

Answer 18

Actual Sales Revenue - Actual Sales Quantity / Standard Sales Quantity * Standard Sales Revenue

Question 19

Sales Activity Variance

Answer 19

(Actual Sales Quantity - Standard Sales Quantity) / Actual Sales Quantity * Standard Contribution Margin

Question 20

Variable Overhead Efficiency Variance

Answer 20

Actual Units Produced * Standard Direct Labor (Hours) * Standard Variable Overhead Price - Actual Direct Labor (Hours) * Standard Variable Overhead Price

Question 21

Variable Overhead Price Variance

Answer 21

Actual Variable Overhead - Actual Direct Labor * Standard Variable Overhead Price