ACCT 3224 Formulas & Layouts

Question 1

Variable Costing Formula

Answer 1

Product Costs = DM + DL + Variable MOH.

Question 2

Absorption Costing Formula

Answer 2

Product Costs = DM + DL + Variable MOH + Fixed MOH.

Question 3

Reconciliation of Income

Answer 3

Fixed MOH deferred in inventory = Ending Inventory Units × Fixed MOH per Unit.

Question 4

Income Statement Layout - Variable Costing

Answer 4

Sales - Variable Expenses = Contribution Margin - Fixed Expenses = Net Operating Income.

Question 5

Income Statement Layout - Absorption Costing

Answer 5

Sales - Cost of Goods Sold = Gross Margin - Selling & Admin Expenses = Net Operating Income.

Question 6

Sales Budget Layout

Answer 6

Expected Sales in Units × Selling Price per Unit = Total Sales.

Question 7

Production Budget Layout

Answer 7

Budgeted Sales + Desired Ending Inventory - Beginning Inventory = Required Production.

Question 8

Direct Materials Budget Layout

Answer 8

Production Needs + Desired Ending Inventory - Beginning Inventory = Materials to Purchase.

Question 9

Cash Budget Layout

Answer 9

Sections: Receipts, Disbursements, Cash Excess/Deficiency, Financing.

Question 10

Direct Material Price Variance Formula

Answer 10

MPV = AQ × (AP - SP).

Question 11

Direct Material Quantity Variance Formula

Answer 11

MQV = SP × (AQ - SQ).

Question 12

Labour Rate Variance Formula

Answer 12

LRV = AH × (AR - SR).

Question 13

Labour Efficiency Variance Formula

Answer 13

LEV = SR × (AH - SH).

Question 14

Variable Overhead Spending Variance

Answer 14

VOSV = AH × (AR - SR).

Question 15

Variable Overhead Efficiency Variance

Answer 15

VOEV = SR × (AH - SH).

Question 16

Segment Margin Formula

Answer 16

Segment Margin = Contribution Margin - Traceable Fixed Costs.

Question 17

Residual Income Formula

Answer 17

Residual Income = Operating Income - (Average Operating Assets × Minimum Required Rate of Return).

Question 18

Contribution Margin Layout

Answer 18

Sales - Variable Costs = Contribution Margin.

Question 19

Segmented Income Statement Layout

Answer 19

Sales - Variable Costs = Contribution Margin - Traceable Fixed Costs = Segment Margin.

Question 20

Relevant Cost Analysis Steps

Answer 20

1. Eliminate irrelevant costs and benefits. 2. Use remaining relevant costs and benefits to make decisions.

Question 21

Special Order Decision

Answer 21

Accept if Incremental Revenue > Incremental Costs.

Question 22

Sell or Process Further Decision

Answer 22

Process further if Incremental Revenue > Incremental Costs of Further Processing.

Question 23

Constrained Resource Allocation

Answer 23

Maximize Total Contribution Margin = Contribution Margin per Unit / Usage of Constrained Resource per Unit.