Price/unit = cost/unit * mark-up rate % OR cost/unit + profit/unit Mark- Up Rate %: Mark-up rate % = 1 + (required profit/unit) / (full cost/unit) Market Based Pricing Target Pricing Target cost = Target Price - Desired Profit (Margin) Target Price = P1 + P2 + P3 + . P N sum of prices for product features VARIANCE ANALYSIS REVENUE AND COST Standard cost per unit of output = Standard quantity of input per unit of output * Standard cost per unit of input AND Budgeted cost = Units produced (expected) * Standard cost per unit of output Actual Costs Direct Materials = Std. direct material cost/unit * Actual units Direct Labor = Std. direct labor cost/unit * Actual units Overhead Costs = Std. OH cost/unit * Actual Units Formula: Standard Costs Direct Materials = Std. quantity/unit of output * Std. cost/unit of material Direct Labor = Std. quantity (hrs)/unit of output * Std. cost/hr Overhead = Std. OH allocation rate * Std. quantity of allocation base/unit of output REVENUE VARIANCES Actual Revenue: AP * AQS Static Budget Revenue: EQS *SP Flexible Budget Revenue: AQS * SP Level 1: Static Budget Variance Actual Revenue - Static Budget Revenue = AP * AQS EQS *SP Level 2: [Flexible Budget Variance + Sales Volume Variance = Static Budget Variance] (AP * AQS) - (AQS * SP) - flexible budget variance measures effect on revenue of a difference between the actual and standard selling prices (AQS - EQS)* SP - sales volume variance measures the effect on total revenue of a difference between actual and planned number of units sold
sales quantity variance (AQT) *(A%i - E%i) * (SP) - sales mix variance measures the effect on revenue of a difference between the actual and planned proportion of sales in each market (AQT - EQT) * E%i * SP - sales quantity variance measures the effect on revenue of a difference between the actual and planned total number of units sold
FIXED COST
Fixed Manufacturing Overhead Account
Dr Fixed Manufacturing Overhead Control Cr Fixed Manufacturing Overhead Applied (units produced * budgeted allocation base * budgeted allocation rate) Budget Variance = Actual Fixed Manufacturing Costs Applied Fixed Manufacturing Cost Production Volume Variance = Budgeted COST VARIANCES (Static/Flexible) Fixed Manufacturing Cost - Applied Actual Costs = AQ * AI * AC Fixed Manufacturing Cost Static Budget Costs = EQ * SI * SC SIFOH - allocation base for fixed overhead Flexible Budget Costs = AQ * SI * SC SCFOH - allocation rate for fixed overhead Accounts: Level 1: Budget Variances Control Account (Actual cost of Input Used) Actual FOH - Applied FOH: (AQ * AIFOH * ACFOH) - (AQ Dr (AI * AC) * AQ or actual costs * SIFOH * SCFOH) Cr (SI * SC) * AQ or static budget costs Level 2: Budget Variances = Spending Variances + VARIABLE COST Production Volume Variances Level 1: Static Budget Variances Actual Cost - Static Budget Cost = (AQ * AI * AC) - (EQ Spending Variance - Actual FOH - Budgeted FOH Production Volume Variance: Budgeted FOH - (AQ * * SI * SC) SIFOH * SCFOH) Level 2: Static Budget Variance = Volume Variance + Flexible Budget Variance PERFORMANCE EVALUATION Volume Variance = Flexible Budget - Static Budget (AQ * SI * SC) - (EQ * SI * SC) (AQ - EQ) * ROA or ROI (Income / Investment in Operating Assets) Accounting Income (operating profit - Depreciation) (SI * SC) Residual Income (RI) = Reported after tax income Measures the effect on costs of a difference between the actual and planned number of units sold [(investment in operating assets) * (required rate of return) Flexible Budget Variance = Actual costs - Flexible ] Budget Economic Value Added (EVA) = Adjusted after tax [(AI * AC) - (SI * SC)] * AQ operating income - [(adjusted total assets - current Measures the effect on costs of a difference between the liabilities) * weighted average cost of capital] actual and standard/budgeted costs per unit produced Payback Period = Total Investment / CF (sold). Level 3: Flexible Budget Variances = Spending Variance + TRANSFER PRICING Efficiency Variances Spending (Price) Variances = Actual Cost - Total Acct Input @ Std Cost (AC - SC) * AI * AQ Measures the total cost effect of a difference between the actual and expected input costs (prices) Efficiency Variances = Total Act Input @ Std Cost - Flex Bud Cost (AI - SI) * AQ * SC Measures the total cost effect of a difference between actual and expected quantity of inputs used
A Beginners Guide to QuickBooks Online 2023: A Step-by-Step Guide and Quick Reference for Small Business Owners, Churches, & Nonprofits to Track their Finances and Master QuickBooks Online
The Accounting Game: Learn the Basics of Financial Accounting - As Easy as Running a Lemonade Stand (Basics for Entrepreneurs and Small Business Owners)
How to Start a Business: Mastering Small Business, What You Need to Know to Build and Grow It, from Scratch to Launch and How to Deal With LLC Taxes and Accounting (2 in 1)
Accounting Principles: Learn The Simple and Effective Methods of Basic Accounting And Bookkeeping Using This comprehensive Guide for Beginners(quick-books,made simple,easy,managerial,finance)