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Kultur Dokumente
Microeconomics
1. Price Elasticity of Demand
ED
% in Quantity Demanded
% in Price
= in Quantity
Demand
d
AvgeQuantity
in Price
Avg Price
ED >
1
Price Increases, P Revenue
Decreases
Price
Decreases, P Revenue
Increases
5. Income Elasticity of Demand
EI
Where
EI
EI
=
> 0
< 0
% in Quantity Demanded
% in Income
for normal
goods
for
inferior
goods
ED =
No
No
Revenue
Increases
Revenue
Decreases
ED <
Wher EX > 0
Y
e
EX = 0
EX < 0
Y
% in Quantity Demanded of X
% in Price of Y
for substitutes
for unrelated goods
for complements
7. Consumption Function
C
c0
c1 Y D
% in Quantity Supplied
% in Price
B. Macroeconomics
10. GDP Gap
GDP Gap = Potential GDP Real GDP
A Positive [+] Gap means that there are unemployed
resources; may lead to unemployment.
A Negative [] Gap means that the economy is running above normal
capacity; may lead to rising prices.
11. Income Approach (Output Approach) Calculation of GDP
+
+
+
+
=
+
=
+
=
+
Compensation to Employees
Corporate Profits
Net Interest
Proprietor's Income
Rental Income of Persons
National Income
Indirect Taxes
Other, Including Statutory Discrepancy
Net National Product
Consumption of Fixed Capital
Gross National Product
Payments of Factor Income to Other Countries
Receipts of Labor Income from Other Countries
Gross Domestic Product
MPS + MPC = 1
in Equilibrium GDP =
MPS
in Spending
Currency
Demand Deposits
M1
Savings Accounts
Small Time Deposits (< $100,000)
M2
Large Time Deposits ( $100,000)
M3
Depn/Amort Expense
=
NIBT
Taxes
=
NIAT
+ Depn/Amort Expense
= Annual Cash Inflow (Net of Taxes)
2. Accounting Rate of Return. The percentage of return on investment each year.
Accounting Rate of Return = Net Income
Investment
BOTH THE PAYBACK PERIOD AND ACCOUNTING RATE OF RETURN TECHNIQUES IGNORE THE
TIME VALUE OF MONEY.
3. Net Present Value. Uses present value tables.
If:
PV of the
>
PV of the Benefits from the Investment, then NPV is
Investment
negative and this is a poor investment.
If:
PV of the
<
PV of the Benefits from the Investment, then NPV is
Investment
positive
this
is
a goodand
investment.
If:
PV of the
=
PV of the Benefits from the Investment, then NPV is zero
Investment
and
Inventor
Receivabl
Payabl
= y
+ es
es
Conversi
Conversio
Deferr
on Period
n Period
al
[Shorten
[Shorten
[Shorten
[Lengthe
]
]
]
n]
[Lengthe
[Lengthe
[Lengthe
[Shorten
n]
n]
] Sales in Inventory)
1A. Inventory Conversion
Period n]
(Number of Days
Inventory
Conversio =
n
Period
Avg Inventory
COGS per Day or Sales per Day
2aD
Where a =
ordering cost per order k D = Annual Demand
k = carrying cost for 1 unit for
1 year
3. Reorder Point
Reorder
Point
360 or 365
days
Payment Period Discount
% in Operating Income
% in Unit Volume
=
Interest Payment
Debt Price Floatation
Cost
+ Safety
Stock
=
Preferred Dividend
Preferred Stock Issue
Price
kRF
(km kRF) bi
Where ks = cost of
existing common equity kRF =
riskfree rate
km = expected market
return bi = stock's
beta coefficient
(3% to
D1
Expected g
P0
D1
P0
F
Expected g
COST MEASUREMENT
Primary Objective of the Cost Accountant: To compute the cost per unit for financial statement
presentation of COGS on the income statement and Ending Inventories on the balance sheet.
3 Components of Manufacturing Costs: (1) Direct Materials
Materials which
become part of the product. (2) Direct Labor
Employees who work on the product.
(3) Factory Overhead
All other MANUFACTURING costs,
(3a) Variable OH
including
normal spoilage. (3b) Fixed OH
Prime Costs:
DM Used and DL Used
Conversion Costs: DL Used and Variable & Fixed OH Applied
FLOW OF
COSTS
Direct Materials or
Raw Materials
Beg. Bal.
COGP
Available
for use
WIP
FGI
Beg. Bal.
Beg. Bal.
||
DM Used
COGM
||
End. Bal.
OH Appl
COGAS
To a/c for
COGM
End. Bal.
End. Bal.
COGS
Labor
B A L A N C E
||
||
||
||
||
||
DL Used
S H E E T
COGS
DL Used
DM Used
COGS
Direct
||
||
||
||
||
INCOME
STATEMENT
||
Applied
OH
Where:
Gross Purchases
Purchase Discounts
Purchase Returns and Allowances
= Net Purchases
+ FreightIn or Transportationin
= Cost of Goods Purchased (COGP)
||
||
||
Acronyms:
COGP = Cost of Goods Purchased
COGM = Cost of Goods Manufactured
COGAS = Cost of Goods Available for Sale
COGS = Cost of Goods Sold
WIP = WorkinProcess or WorkinProgress
FGI = Finished Goods Inventory
Ending Inventory
= Units shipped
B. WeightedAverage
Cost per EFU = Beg. Inv. + Current
Costs
EFUs
Step 4. Complete the WIP T account. Using the number of Ending Inventory EFUs from Step 2 and
Cost per EFU in Step 3, calculate the $ value of ending inventory in WIP and plug COGM.
Lost Units: (1) Abnormal Spoilage is a PERIOD COST; do not include it in WIP.
(2) Normal Spoilage is a PRODUCT COST; the costs of all units are spread over
the good units; usually part of OH.
COST MEASUREMENT
BACKFLUSH COSTING
Traditional Cost Flows
Direct
Materials
|
Direct
Labor
|
Var &| Fixed
OH
|
WIP
|
|
|
COGM
FGI
|
|
|
COGS
|
COGS
|
Backflush Costing Method I JIT Inventory Methods with Vendors/Suppliers: Combine DM and WIP,
Combine DL and OH
Materials & In
Process
|
Conversion Cost
Control
|
FGI
|
|
|
COGS|
|
|
Backflush Costing Method II JIT Inventory Methods with Vendors/Suppliers & Customers: Same as
Method I, but also no
FGI.
Materials & In
Process
|
COGS
|
| Conversion Cost Control
|
|
|
|
Traditio
nal
1. Purchase raw materials.
Backflush
Method I
JIT Inventory
Methods with
Materials
DR
Materials & InProcess DR
A/P
A/P
CR
CR
2. Issue materials to production.
WIP
DR
Materials
CR
3. Incur direct labor costs.
WIP
DR
Payroll
CR
4. Incur overhead costs.
Variable OH Control
DR Fixed OH Control
DR
A/P, etc.
5. Apply overhead.
WIP
DR
Variable OH Control
CR
Fixed OH Control
6. Complete goods.
FGI
WIP
CR
None
DR
7. Sell goods.
None
FGI
DR
Conversion Cost Ctrl
CR
Materials & InProcess
Backflush
Method II
JIT Inventory
Methods with
Same as
I.
None
Same as
I.
None
COGS
DR
Conversion Cost Ctrl
CR
Materials & InProcess
CR
COGS
DR
Same as Traditional.
FGI
CR
8. Recognize overhead variance (underapplied).
COGS
Overhead Control
CR
DR
COGS
DR
Conversion Cost Ctrl
CR
Same as
I.
AP
AQPurchased/Used
|
|
SP
DM Purchase Price
DL Rate Variance
(1) Variable OH Spending Variance
=
DM Quantity/Usage Variance
DL Efficiency/Usage Variance
SQAllowed
Efficiency Variance
(Based on Units Produced)
Variance * * *
SP
(2) Variable OH
* * * Sales Volume
For DM, DL, and VOH variances, as you go UP the matrix, if the numbers are going UP (increasing),
then the variances are
UNFAVORABLE.
* * * For sales variances, as you go UP the matrix, if the numbers are going UP (increasing), then the
variances are
FAVORABLE. Remember that these are REVENUES and not COSTS. * * *
Fixed OH Variances.
AQ
*
|
=
AP
=
(3) Fixed OH Spending/Budget
Variance
| BUDGET
|
SQAllowed
*
SP
|
| (Based on Units Produced)
FOH
BUDGET
FOH
BUDGET
+
+
AP
VAR (AQ *
SP)
VAR (SQ *
SP)
OH Spending/Budget
Variance
OH Efficiency Variance
Production/Volume
Variance [Not
Controlla
ble
Variance
Controllabl
e]
SQAllowed
*
(Based on Units Produced)
SP
(# HRs)(Variable OH
[B] $6,000
[C] $6,720
[D] $7,600
Correct Answer: [A] $6,800 favorable is the DM usage variance. Hints: First use the DM Purchase
Price Variance to
calculate SP, then remember AQPurchased AQUsed and AQUsed is used for the DM usage variance.
Also, $6,000 unfavorable is the DM price variance and uses AQUsed. The $7,200 unfavorable DM
purchase price variance given in the problem uses AQPurchased.
or
or