Kris BEC Formulas

Question 1

Direct Materials

Answer 1

Beginning Balance + Purchases + Freight-In - Direct Materials Used = Ending Balance

Question 2

Work in Process

Answer 2

Beginning Balance + Direct Materials Used + Direct Labor Used + Factory Overhead Applied - Cost of Goods Manufactured = Ending Balance

Question 3

Finished Goods

Answer 3

Beginning Balance + Cost of Goods Manufactured = Cost of Goods Available for Sale - Cost of Goods Sold = Ending Balance

Question 4

FIFO Method of Equivalent Units

Answer 4

Units Completed – (Beginning WIP Units * % Complete) + (Ending WIP Units * % Complete)

Question 5

Allocated Costs under an Activity Based System

Answer 5

Total Cost * (Product Setup Hours/Total Setup Hours)

Question 6

Inventory Conversion Period

Answer 6

Average Inventory/(COGS/365)

Question 7

Receivables Collection Period

Answer 7

Average Accounts Receivable/(Sales/365)

Question 8

Payables Deferral Period

Answer 8

Average Account Payable/(COGS/365)

Question 9

Cash Conversion Cycle

Answer 9

Inventory Conversion Period + A/R Collection Period – Payables Deferral Period

Question 10

Gross Margin

Answer 10

(Sales – COGS)/Sales

Question 11

Contribution Margin

Answer 11

(Sales – Variable Cost)/Sales

Question 12

Operating Profit

Answer 12

(Sales – COGS - Admin Expenses – Depreciation – Interest Expense - Taxes)/Sales

Question 13

Profitability Index

Answer 13

PV of After Tax Cash Flows/Original Cash Invested

Question 14

Economic Value Added

Answer 14

NOPAT – (Invested Capital * WACC)

Question 15

Average A/R Balance

Answer 15

(Credit Sales/365) * Average Collection Period

Question 16

Return on Sales

Answer 16

Net Operating Profit/Sales

Question 17

Invested Assets

Answer 17

Sales/Asset Turnover

Question 18

Asset Turnover

Answer 18

Sales/Total Assets

Question 19

Inventory Turnover

Answer 19

COGS/[(Beginning Inventory + Ending Inventory)/2]

Question 20

Return on Investment

Answer 20

Net Operating Profit/Invested Capital

Question 21

Return on Assets

Answer 21

Net Income/Average Total Assets

Question 22

Quick Ratio

Answer 22

(Cash + A/R)/Current Liabilities

Question 23

Residual Income

Answer 23

Net Operating Profit – (Invested Assets * Imputed Interest Rate)

Question 24

Free Cash Flow

Answer 24

Net Income After Tax + Depreciation - ∆ Working Capital – Capital Expenditures

Question 25

After Tax Cash Flow

Answer 25

Cash Flows before Taxes – [(Cash Flows before Taxes – Depreciation )* Tax Rate]

Question 26

Cost of Debt

Answer 26

(Interest Expense – Tax Benefit)/Carrying Value of Debt

Question 27

Excess Present Value

Answer 27

(Present Value of Future Net Cash Inflows/Initial Investment) * 100

Question 28

Degree of Operating Leverage

Answer 28

% ∆ Operating Income/% ∆ Sales Volume

Question 29

CAPM

Answer 29

Risk Free Rate + [(Market Rate – Risk Free Rate) * Beta]

Question 30

Times Interest Earned

Answer 30

(Sales – COGS – Administrative Expenses – Depreciation)/Interest Expense

Question 31

Price Elasticity of Demand

Answer 31

% ∆ Quantity Demanded/% ∆ Price

Question 32

Income Elasticity of Demand

Answer 32

% ∆ Quantity Demanded/% ∆ Income

Question 33

Multiplier Effect

Answer 33

[1/(1-Marginal Propensity to Consume) * ∆ Spending

Question 34

Book Value per Share

Answer 34

(Common Stock + Retained Earnings)/Outstanding Shares

Question 35

Expected Growth

Answer 35

Year1 Dividend/(Stock Price + Expected Growth Rate)

Question 36

Annual Cost of Carrying Inventory

Answer 36

(Order Size/2) * Unit Cost * Cost of Capital

Question 37

Safety Stock Costs

Answer 37

Total Carrying Cost + (Stock Out Cost * Probability * Number of Times Recovery)

Question 38

Re-Order Point

Answer 38

Average Daily Sales * Average Lead Time

Question 39

Economic Order Quantity (EOQ)

Answer 39

√(2 * Annual Unit Demanded * Order Cost)/Cost of Inventory

Question 40

Nominal Annual Cost

Answer 40

[% Discount/(100 - % Discount)] * [360/(Total Days – Discount Days)]

Question 41

COSO’s Enterprise Risk Management Framework Components

Answer 41

1. Internal Environment 2. Objective Settings 3. Event Identification 4. Risk Assessment 5. Risk Response 6. Control Activities 7. Information and Communication 8. Monitoring

Question 42

Total Variance

Answer 42