Formulas

Question 1

Return of investment (ROI)

Answer 1

1. Profit/invested capital

2. returns on sales * investment turnover

Question 2

Residual income (RI)

Answer 2

profit - (invested capital * imputed interest rate)

Question 3

Cost of debt

Answer 3

(1 - tax rate) * interest rate

Question 4

Price variance formula

Answer 4

(Actual price - budgeted price) * actual quantity of input

Question 5

Efficiency variable formula

Answer 5

(Actual quantity of input used - budgeted quantity of input for set quantity) * Budgeted price of input

Question 6

Direct material price variance

Answer 6

PQ(AP-SP)

quantity purchased * (actual price - standard price)

Question 7

Direct material quantity variance

Answer 7

SP(AQ-SQ)

standard price * (actual quantity used - standard quantity allowed)

Question 8

Direct labour rate variance

Answer 8

AH(AR-SR)

actual hours used (actual rate per hr - standard rate per hr)

Question 9

Direct labour efficiency variance

Answer 9

SR (AH-SH)
standard rate (actual hours used - standard hours)

Question 10

Supplier performance index (SPI)

Answer 10

Total supplier activity costs/ total purchase price

Question 11

Economic order quantity (EOQ)

Answer 11

((2*annual requirement * cost per order)/annual carrying cost per unit)^0.5