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Summary Formula sheet Management Accounting for IBA
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Formula sheet MA for IBA
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Formulae ManagementAccounting
WAM and FIFO
Net profit margin: net income/revenue * 100
Unit contribution margin: selling price – variable costs
Breakeven: Q = (Fixed C + operating profit)/ (USP-UVC 1)
Operating profit should equal 0
Net profit margin: net income / revenue
Weighted average method (TC):
1. Calculate equivalent units
DM = FG +WIP
Conversion = FG + (Conversion rate * WIP)
2. Calculate average production costs
DM rate = (DM costst+1 + DM costst) / DM
Conversion cost rate = (conversion ratet+1 + conversion ratet) / Conversio006E
3. Calculate WIP, FG accounts (inventory)
FGinventory = (FG * DM rate) + (FG * Conversion cost rate)
WIPinventory = (WIP * DM rate) + (EU * conversion cost rate)
FIFO method (! WATCH FOR ADDED COSTS !):
1. Calculate equivalent units (focus on t+1)
DM = FG – WIPstart + WIPend
Conversion = ((1-conversion rate) * WIP + FG + (conversion rate * WIP end)
2. Calculate average production costs
DM rate = DM costs / (FG – WIPstart + WIPend)
Conversion cost rate = Conversion costs / conversion
3. Calculate WIP, FG accounts (inventory)
FGinventory= (FG * DM rate) + (WIPstart + ((1-conversion rate * WIP) * conversion cost rate) + (FG
* conversion cost rate)
WIPinventory = (WIPend * DM rate) + ((conversion rate * WIPend) * conversion cost rate)
Costs per unit: DM rate + Conversion cost rate
Normal costing:
1. Allocation rate: Total assumed budgeted overhead / assumed labour hours
2. Allocated: Actual hours * Allocation rate
Under- and over allocation: Budgeted cost times actual hours, then compare MO budget
and actualco
1
Unit selling price, variable cost
, Cost allocation
Allocation methods (thanks Jorg):
1. Physical Measure
Costs of Product X: (Quantity of X / quantity of X+Y) * joint costs
Costs of Product Y: (Quantity of Y / quantity of X+Y) * joint costs
2. Sales value at split-off
Costs of Product X:
( Price of X∗quantity of X )
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Costs of Product Y:
( Price of Y∗quantity of Y )
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3. Net realizable value (NRV)
Product X costs: Quantity of X∗(price after additional processing – extra costs)
Product Y costs: Quantity of Y ∗( price after additional processing – extra costs)
JC product X: Product X costs/( Product X costs+ Product Y costs) Joint costs
JC product Y: Product Y costs /( Product X costs+ Product Y costs)Joint costs
4. Constant gross margin
1. Calculate gross margin
2. Determine target COGS of each product
3. Deduct separable costs from target COGS
Cost allocation 2
Department Actual costs Used by (%):
HR IT Cup Saucer
HR 1.8M - 10 20 70
IT 7.2 25 - 50 25
Direct method
Cost of division x: share x / total * cost. Ignores department percentages.
Example:
Assign support department costs to the two production divisions:
Cup: 0.2/0.9 * 1.8 + 0.5/0.75 * 7.2 = 5.2
Step down method
Same example as earlier.
1. HR to IT: .1 * 1.8 = .18
2. HR to CUP: .2 * 1.8 = .36
3. HR to SAU: .7 * 1.8 = 1.26
IT costs become 7.2 + .18 = 7.38
4. IT to CUP: .67 * 7.38 = 4.92
5. IT to SAU: .33 * 7.38 = 2.46
IT to HR cost: 1 = .18
Total Cup costs: 2 + 4 = .36 + 4.92 = 5.28
Total Saucer cost: 3 + 5 = 1.26 + 2.46 = 3.72
Cup + Saucer: 5.28 + 3.72 = 9
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