A.

Total Sales Pesos or Amount of Sales to Earn a Desired Profit % Change in Output
Sensitivity =
Total Fixed Cost + Desired Profit Before Tax % Change in Input
=
CMR

= BEP PESOS + Margin of Safety Sales

B. Total Sales Units or Number of Sales to Earn a Desired Profit

Total Fixed Cost + Desired Profit After Tax / (1-tax rate)
=
CMU

= BEP Units + Margin of Safety Units

Differential Fixed Cost

Cost Indifference Point =
Differential Variable Cost per Unit
 Total Fixed Cost Margin of Safety Pe
=
Mix BEP Pesos Composite CMR =
=
Composite CMR = ( CMR A x Mix Ratio ) + (CMR B x Mix Ratio)

Total Sales Units or peso of a single product Margin of Units (MS

Mix Ratio =
Total Sales Units or peso of a all products combined =
=

Total Fixed Cost

=
Mix BEP Units Composite CMU Margin of Safety Ra
=
Composite CMR = ( CMU A x Mix Ratio ) + (CMU B x Mix Ratio )
=
Total Sales Units or peso of a single product
Mix Ratio =
Total Sales Units or peso of a all products combined
=

Profit
=
=
=
=
=

Net Profit Ratio (NPR

=
=
Margin of Safety Pesos ( MSP) If one-year operations is presented;
Total Sales - BEP Pesos Total Contribution Margin
DOL =
Profit Net Operating Income
CMR
If at least 2-year comparative information is provided;
Margin of Units (MSU) Percentage Change in Profit
DOL =
Total Sales Units - BEP Units Percentage Change in Sales
Profit
CMU

Margin of Safety Ratio (MSR)

MSP
Total Sales Pesos
MSU
Total Sales Units
Net Profit Ratio
CMR

Total Revenues - Total Cost

Total Contribution Margin - Fixed Cost
MSU x CMU
MSP x CMR
Total Revenues x NPR

Net Profit Ratio (NPR) or Rate of Return on Sales (ROS)

EBIT or Operating Income
Total Sales Pesos
MSR x CMR
 MATERIALS LABOR

Actual AP X AQ AR X AH

Normal AP X AQ AR X AH

Extended Normal (Flexible Budget) SP X AQ SR X AQ

Standard (Static Budget) SR X SQ SR X SH

 OVERHEAD

ACTUAL
Variable Cost Price Factor
SR X AH
Direct Materials Material Price Variance
SR X AH Direct Labor Labor Rate Variance
Variable Overhead Overhead Spending Variance
SR X SH Fixed Cost
Fixed Overhead Overhead Spending Variance
Variance
 Raw Materials (Standard Price * Actual Quantity)

Physical Factor

Materials Quantity Variance Work in Process (Standard Price * Standard Quantity)

Labor Efficiency Variance Materials Quantity Variance ( AQ-SQ ) SP
Overhead Efficiency Variance

Overhead Volume/Capacity Variance

Work in Process (Standard Rate * Standard Hours)
Labor Rate Variance ( AR-SR ) SH

Factory Overhead Control ( All Actual FOH)

Work in Process (Standard Factory OH Allowed)

Applied Factory Overhead

Variable Spending Variance
Volume Variance

Cost of Goods Sold

Fixed Spending Variance
Variable Efficiency Variance

Cost of Goods Sold

Applied Factory Overhead

Finished Goods

Accounts Receivable ( or Cash)

Cost of Goods Sold
Materials (Standard Price * Actual Quantity) xx
Accounts Payable (Actual Price* Actual Quantity) xx
Materials Price Variance (AP-SP) AQ xx

in Process (Standard Price * Standard Quantity) xx

ials Quantity Variance ( AQ-SQ ) SP xx
Raw Materials (Standard Price * Actual Quantity) xx

xx
in Process (Standard Rate * Standard Hours)
Rate Variance ( AR-SR ) SH xx
Salaries Payable (Actual Rate* Actual Hours) xx
Labor Efficiency Variance (AH-SH) SR xx

y Overhead Control ( All Actual FOH) xx

Cash or Any Appropriate Amount xx

in Process (Standard Factory OH Allowed) xx

Applied Factory OH xx

ed Factory Overhead xx
ble Spending Variance xx
me Variance xx
Factory Overhead Control xx
Fixed Spending Variance xx
Variable Efficiency Variance xx

f Goods Sold xx
Spending Variance xx
ble Efficiency Variance xx
Variable Spending Variance xx
Volume Variance xx

f Goods Sold xx
ed Factory Overhead xx
Factory Overhead Control xx

xx
Work in Process xx

nts Receivable ( or Cash) xx

Sales xx
f Goods Sold xx
Finished Goods xx
 Actual Quantity A Standard Quantity A
Actual Quantity B Standard Quantity B
Total Actual Quantity Total Std. Quantity

A= ( Total Actual Quantity - Total Std. Quantity )

MATERIALS
YIELD

( )
VARIANCE
B= Total Actual Quantity - Total Std. Quantity

XX (Fav/Unfav)

Actual Hours A Standard Hours A

Actual Hours B Standard Hours B
Total Actual Hours Total Std. Hours

A= ( Total Actual Hours - Total Std. Hours )

LABOR YIELD

( )
VARIANCE
B= Total Actual Hours - Total Std. Hours

XX (Fav/Unfav)

Actual Quantity A Standard Quantity A

Actual Quantity B Standard Quantity B
Total Actual Quantity Total Std. Quantity

Mix A = ( Actual Quantity A

Total Actual Quantity
-
Standard Quantity A
Total Std. Quantity )
MATERIAL MIX

( )
VARIANCE
Actual Quantity B Standard Quantity B
Mix B = -
Total Actual Quantity Total Std. Quantity
XX (Fav/Unfav)

Labor Hours A Standard Hours A

 Labor Hours B Standard Hours B
Total Actual Hours Total Std. Hours

Mix A = ( Labor Hours A

Total Actual Hours
-
Standard Hours A
Total Std. Hours )
LABOR MIX

( )
VARIANCE
Labor Hours B Standard Hours B
Mix B = -
Total Actual Hours Total Std. Hours
XX (Fav/Unfav)
Standard Quantity A Standard
x
Total Std. Quantity Price of A

Standard Quantity B Standard

x
Price of B
Total Std. Quantity

Standard Hours A Standard Rate

x
Total Std. Hours of A

Standard Hours B Standard Rate

x
Total Std. Hours of B

Standard
Total Actual Quantity x
Price of A

Standard
Total Actual Quantity x
Price of B
 Standard Rate
Total Actual Hours x
of A

Standard Rate
Total Actual Hours x
of B
Relationship Between

Production and Sales Net Income Inventories

P = S AC = VC BE = BB
P > S AC > VC BE > BB
P < S AC < VC BE < BB
Sales xx
Less: Desired Income xx
Total Target Cost xx

Total Target Cost

Target =
Unit Cost Total Units
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
Total Cost OR Total Cost per Unit:

Desired ROI per unit =

Markup percentage using total cost

=
per unit

Selling price =

Desired ROI per unit =

Markup percentage =

Example: Absorption-Cost Mark up =

Percentage

Example: AVariableCost Mark up =

Percentage
 xx
xx
xx
xx
xx
xx
xx

Desired ROI Percentage x Total Investment

Volume of Units

Desired ROI
Total Cost per Unit

Unit Cost + (Markup % on Unit Cost × Unit Cost)

Desired ROI Percentage x Total Investment

Volume of Units

Desired Profit + Cost Not included in the Base

Alternative Cost Base

Desired Profit + Variable Selling and Admin and Fixed Selling and Admin
Total Product Cost under AC

Desired Profit + All Fixed Cost

All Variable Cost
Shutdown Avoidable Fixed Cost+ Start Up Cost (if any)
=
Point Contribution Margin per Unit or Ratio
Variable Cost per = Highest Activity Cost - Lowest Activity Cost
Unit Highest Activity Units - Lowest Activity Units

To compute for fixed Cost, you have the option of using either the highest or lowest quantity.
The equation presented below assumes the highest activity cost

Fixed Cost = Highest Activity Cost - (Variable Cost/U X HAUs)

Then compute for the Total Cost Using the regression Equation.
Equation 1 Y= a + bx
Equation 2 ∑Y = na + b∑X.
Equation 3 ∑XY = a∑X + b∑X2
Cost or Cash Outflow xx

Cash Inflow or Savings incidental to the

Less: xx
Acquisition of the investment project

Net Investment xx

Initial Investment
Even CIAT =
Annual Net Cash Inflows

AROR on Initial Average Annual Net Income

=
Investment Investment

AROR on Average Average Annual Net Income

=
Investment (Investment + Salvage Value) /2

Net Cash Inflows

Payback Reciprocal =
Investment
or
1
Payback Reciprocal =
PaybackPeriod

Total Present Value of Cash Inflows

Profitabililty Index =
Cost of Investment

Total Present Value of Cash Inflows

Profitabililty Index =
Total Present Value of Cash Outflows

Net Present Value

NPVI =
Cost of Investment

Cost of Investment
PVR for IRR =
Net Cash Inflows

Net Present Value

EAA =
Present Value Annuity
 Interest
Nominal Rate = X Time
Principal

Financing Cost 365

Effective Rate = X
Net Proceeds Credit Period

Percentage Discount 360 or 365 days

Effective Interest = X
100 % - Percentage Discount Credit Period- Discount Period

Interest (Financing Cost) Days in the yr (360 or 365 days)

Cost of Term Loans = X
Principal-Interest-Comp.Bal Days loan is outstanding

Principal/Amount Amount Needed

=
to be borrowed (1-Compensating Bal. % - Interest %)

or

Principal/Amount Net Proceeds in P

=
to be borrowed Net Proceeds %

Effective Interest 2 x # of Installment x Interest

on Installment =
Loan (1 + # of Installments) x Principal

Cost of Commercial Discount + Flotation Cost 365 days

= X
Paper Issue Price Credit Period

Cost of Pleding Financing Cost 365 days

= X
Receivable Net Proceeds Credit Period