# Shared Flashcard Set

## Details

Managerial Accounting
Managerial Accounting Equations
26
Accounting
01/06/2011

Term
 Prime Cost =
Definition
 = Direct Materials Cost + Direct Labor Cost
Term
 Total Factory Cost or Manufacturing Cost =
Definition
 Direct Materials + Direct Labor Cost + Factory Overhead
Term
 Conversion Cost =
Definition
 = Direct Labor Cost + Factory Overhead Cost
Term
 Cost of Goods Manufactured (COGM) =OrCost of Goods manufactured =
Definition
 = Total Factory Cost + Opening Work in Process Inventory - Ending Work in Process InventoryOr= Direct materials cost + Direct labor cost + Factory overhead cost + Opening work in process inventory - Ending work in process inventory
Term
 Cost of goods sold (COGS) =
Definition
 = Cost of goods manufactured + Opening finished goods inventory - Ending finished goods inventory
Term
 Number of units manufactured =
Definition
 = Units sold + Ending Finished Goods units - Opening finished goods units
Term
 Per unit cost of goods manufactured =
Definition
 = Cost of goods manufactured / Units manufactured
Term
 Materials used or consumed =
Definition
 = Opening inventory or materials + Net purchases of materials - Ending inventory of materials
Term
 Gross profit =
Definition
 = Net sales - Cost of goods sold
Term
 Operating profi =
Definition
 = Gross profit - Operating expenses
Term
 Operating or commercial expenses =
Definition
 = Selling or marketing expenses + General or administrative expenses
Term
 Per unit gross profit =
Definition
 = Gross profit / No. of units sold
Term
 Per unit gross profit =
Definition
 = Gross profit / No. of units sold
Term
 Per unit net profit =
Definition
 = Net profit / No. of units sold
Term
 Percentage of GP to sales =
Definition
 = (Gross profit / Net sales) × 100
Term
 Percentage of net profit to sales =
Definition
 = (Net profit / Net sales) × 100
Term
 Contribution margin =
Definition
 = Sales - Variable expenses (manufacturing and nonmanufacturing)
Term
 Net operating income =
Definition
 = Contribution margin - Fixed expenses (manufacturing and non manufacturing)
Term
 Contribution margin ratio =
Definition
 = Contribution margin / Sales
Term
 Break even point (units) =
Definition
 = Fixed expenses / Unit contribution margin
Term
 Break even point (dollar sales) =
Definition
 = Fixed expenses / CM ratio
Term
 Units sales to attain target profit =
Definition
 = (Fixed expenses + Target profit) / Unit contribution margin
Term
 Dollar sales to attain target profit =
Definition
 = (Fixed expenses + Target profit) / Contribution margin ratio
Term
 Margin of safety =
Definition
 = Total budgeted or actual sales - Break even sales
Term
 Margin of safety percentage or margin of safety ratio =
Definition
 = Margin of safety / Total budgeted or actual sales
Term
 Degree of operating leverage =
Definition
 = Contribution margin / Net operating income
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