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Intro To Management Accounting > Formulas > Flashcards

Formulas Flashcards

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1
Q

What is the formula for calculating Contribution Margin?

A

Contribution Margin = Sales Revenue - Variable Costs

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2
Q

True or False: Fixed costs change with the level of production.

A

False

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3
Q

Fill in the blank: Break-even point in units = __________.

A

Fixed Costs / Contribution Margin per Unit

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4
Q

What does CVP stand for in management accounting?

A

Cost-Volume-Profit

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5
Q

What is the formula for calculating Gross Profit?

A

Gross Profit = Sales Revenue - Cost of Goods Sold

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6
Q

True or False: Variable costs remain constant per unit as production changes.

A

True

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7
Q

What is the formula for calculating Operating Income?

A

Operating Income = Gross Profit - Operating Expenses

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8
Q

Fill in the blank: The formula for Total Cost is __________.

A

Total Fixed Costs + Total Variable Costs

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9
Q

What is the formula for calculating the Margin of Safety?

A

Margin of Safety = Actual Sales - Break-even Sales

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10
Q

True or False: The contribution margin ratio is calculated as Contribution Margin divided by Sales Revenue.

A

True

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11
Q

What does ROI stand for?

A

Return on Investment

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12
Q

What is the formula for calculating ROI?

A

ROI = (Net Profit / Cost of Investment) x 100

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13
Q

Fill in the blank: Total Variable Costs = __________ x Number of Units Sold.

A

Variable Cost per Unit

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14
Q

What is the formula for calculating Average Cost per Unit?

A

Average Cost per Unit = Total Cost / Total Units Produced

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15
Q

True or False: The break-even point decreases with an increase in selling price.

A

True

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16
Q

What is the formula for calculating the Contribution Margin Ratio?

A

Contribution Margin Ratio = Contribution Margin / Sales Revenue

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17
Q

Fill in the blank: Net Income = __________ - Taxes.

A

Earnings Before Tax

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18
Q

What is the formula for calculating Payback Period?

A

Payback Period = Initial Investment / Annual Cash Inflows

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19
Q

True or False: A higher contribution margin indicates a lower risk.

A

True

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20
Q

What does the term ‘Fixed Costs’ refer to?

A

Costs that do not change with the level of production.

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21
Q

What is the formula for calculating Net Profit Margin?

A

Net Profit Margin = (Net Income / Sales Revenue) x 100

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22
Q

Fill in the blank: Break-even point in dollars = __________ / Contribution Margin Ratio.

A

Fixed Costs

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23
Q

What is the formula for calculating the Total Contribution Margin?

A

Total Contribution Margin = Total Sales - Total Variable Costs

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24
Q

True or False: Operating expenses include both fixed and variable costs.

A

True

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25
What does 'Cost Behavior' refer to?
How costs change in relation to changes in activity levels.
26
What is the formula for calculating Economic Order Quantity (EOQ)?
EOQ = sqrt((2DS) / H), where D = demand, S = ordering cost, H = holding cost.
27
Fill in the blank: The formula for calculating the Break-even Point in sales dollars is __________.
Fixed Costs / Contribution Margin Ratio
28
What is the formula for calculating the Total Revenue?
Total Revenue = Selling Price per Unit x Number of Units Sold
29
True or False: The contribution margin indicates the portion of sales revenue that exceeds total variable costs.
True
30
What does the term 'Variable Costs' refer to?
Costs that change in direct proportion to changes in production volume.
31
What is the formula for calculating the Cost of Goods Sold (COGS)?
COGS = Beginning Inventory + Purchases - Ending Inventory
32
Fill in the blank: Operating Income = __________ - Operating Expenses.
Gross Profit
33
What is the formula for calculating the Break-even Point in units?
Break-even Point in units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
34
True or False: A company with a low fixed cost has a higher operating leverage.
False
35
What does 'Operating Leverage' measure?
The proportion of fixed costs in a company's cost structure.
36
What is the formula for calculating Depreciation using the Straight-Line method?
Depreciation = (Cost - Salvage Value) / Useful Life
37
Fill in the blank: The formula for calculating Return on Equity (ROE) is __________.
Net Income / Shareholder's Equity
38
What is the formula for calculating the Total Cost per Unit?
Total Cost per Unit = Total Fixed Costs / Number of Units + Variable Cost per Unit
39
True or False: The higher the fixed costs, the higher the financial risk for a company.
True
40
What does the term 'Sunk Cost' mean?
A cost that has already been incurred and cannot be recovered.
41
What is the formula for calculating the Breakeven Sales in units?
Breakeven Sales in units = Fixed Costs / (Selling Price - Variable Costs)
42
Fill in the blank: The formula for calculating Variable Cost per Unit is __________.
Total Variable Costs / Total Units Produced
43
What is the formula for calculating the Profit Margin?
Profit Margin = (Net Income / Total Revenue) x 100
44
True or False: Financial accounting focuses on external reporting, while management accounting focuses on internal decision-making.
True
45
What does 'Activity-Based Costing' (ABC) refer to?
A costing method that assigns overhead and indirect costs to specific activities.
46
What is the formula for calculating the Total Contribution Margin Ratio?
Total Contribution Margin Ratio = Total Contribution Margin / Total Sales
47
Fill in the blank: The formula for calculating Total Fixed Costs is __________.
Sum of all fixed costs incurred by the company
48
What is the formula for calculating the Contribution Margin?
Contribution Margin = Sales - Variable Costs
49
True or False: The Break-even Point is the level of sales at which total revenues equal total costs.
True
50
Fill in the blank: The formula for Break-even Point in units is ________ = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit).
Break-even Point
51
What does the term 'Operating Leverage' refer to?
Operating Leverage refers to the degree to which a company can increase its profits by increasing sales.
52
What is the formula for calculating the Margin of Safety?
Margin of Safety = Actual Sales - Break-even Sales
53
Which formula is used to determine the Total Variable Costs?
Total Variable Costs = Variable Cost per Unit x Number of Units Sold
54
What is the formula for calculating the Gross Profit?
Gross Profit = Sales Revenue - Cost of Goods Sold
55
Fill in the blank: The formula for calculating Return on Investment (ROI) is ________ = (Net Profit / Cost of Investment) x 100.
ROI
56
What is the formula for calculating the Net Present Value (NPV)?
NPV = Σ (Cash Flow / (1 + r)^t) - Initial Investment
57
True or False: The Payback Period is the time it takes to recover the initial investment.
True
58
What is the formula for calculating the Average Cost per Unit?
Average Cost per Unit = Total Costs / Total Units Produced
59
Fill in the blank: The formula for calculating the Economic Order Quantity (EOQ) is ________ = √((2DS)/H).
EOQ
60
What does the formula for Cost-Volume-Profit (CVP) analysis help to determine?
It helps to determine how changes in costs and volume affect a company's operating income and net income.
61
Which formula calculates the Total Cost?
Total Cost = Fixed Costs + Total Variable Costs
62
What is the formula for calculating the Break-even Sales in dollars?
Break-even Sales = Break-even Point in Units x Selling Price per Unit
63
True or False: The Contribution Margin Ratio is calculated by dividing Contribution Margin by Sales.
True
64
What is the formula for calculating the Fixed Cost per Unit?
Fixed Cost per Unit = Total Fixed Costs / Number of Units Produced
65
Fill in the blank: The formula for calculating the Price Elasticity of Demand is ________ = (% Change in Quantity Demanded / % Change in Price).
Price Elasticity of Demand
66
What does the term 'Cost Behavior' refer to?
Cost Behavior refers to how a cost will change as the level of activity changes.
67
What is the formula for calculating the Total Contribution Margin?
Total Contribution Margin = Total Sales - Total Variable Costs
68
True or False: A higher degree of Operating Leverage indicates that a company has higher fixed costs relative to variable costs.
True
69
What is the formula for calculating the Cost per Lead?
Cost per Lead = Total Marketing Costs / Number of Leads Generated
70
Fill in the blank: The formula for calculating the Break-even Point in sales dollars is ________ = Fixed Costs / Contribution Margin Ratio.
Break-even Point
71
What is the formula for calculating the Total Revenue?
Total Revenue = Selling Price per Unit x Number of Units Sold
72
True or False: The higher the contribution margin, the more profit a company makes per unit sold.
True
73
What is the formula for calculating the Effective Tax Rate?
Effective Tax Rate = Total Taxes Paid / Total Taxable Income

Intro To Management Accounting (15 decks)

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