Equations

• What is the equation for the high low method?

  Y=a +bx
• Whats the order of major groups for a COGM?


  begining RM

  + Purchased

  (ending RM)

  (IDM)

  = DM Used

  + DL

  +MOH

  = total manufacturing costs

  + beginning WIP

  less ending WIP

  = COGM
• What is the equation for DM Used?

  DM Used = DM Beginning + DM Purchased - DM Ending
• what is the equation for Break even in units?

  Fixed costs divided by contribution margin per unit.
• What is the equation for break even in dollar amount?

  Fixed costs divided by contribution margin.
• what is the equation for contribution margin?

  Contribution Margin = Sales Revenue - Variable Costs
• At the break even point CM=FC
• What is the equation for target profit in units?

  Target profit + FC / CM per unit
• What is the formula for the margin of safety?

  sales- breakeven point
• what is the formula for % margin of safety?

  MOS $ / Sales $
• what is the equation for contribution margin ratio?

  (Sales - Variable Costs) / Sales
• what does the contribution margin ratio mean?

  The contribution margin ratio is the percentage of each sales dollar that is available to cover fixed costs and contribute to profit.
• what does degree of operating level mean?

  The degree of operating leverage (DOL) measures the sensitivity of a company's operating income to changes in its sales revenue.
• what happens if a company has a high DOL?

  have a greater sensitivity to a greater change in income fluctuation
• What is the equation for DOI?

  CM/OI
• How do you used DOI to evaluate a change in sales?

  DOL = ^ income/ ^sales

  Income= DOL x Sales
• how do you calculate overhead rate?


  MOH/Machine ours
• What is POR?

  Predetermined overhead rate
• what does it mean if MOH is overapplied?

  Overapplied MOH means that the actual manufacturing overhead costs are less than the amount allocated or applied to production.