Published On:Saturday 17 December 2011
Posted by Muhammad Atif Saeed
COST ACCOUNTING FORMULAS & IMPORTANT TERMINOLOGIES
1. Prime Cost = Direct Material + Direct Labor
2.Total Production Cost = Prime Cost + FOH Cost
3.Conversion Cost = Direct Labor + FOH Cost
4. Raw Material Consumed == Raw Material Opening + Material Purchases – Material Closing
5.Manufacturing Cost = Prime Cost + FOH Cost {Same as Sr. No.2}
6. Cost Of Goods Manufactured == Manufacturing Cost + Opening WIP – ClosingWIP
7.Goods Available for Sale == Cost Of Goods Manufactured + Opening Finished Goods
8. Cost of Goods Sold = Goods Available for Sale – Closing Finished Goods
9. Contribution Margin = Sales – Variable Cost
10.Income Statement = Gross Profit – Operating Expenses
11.Income Statement = (Sale-COGS) – (Selling + Admin + MarketingExpenses)
12. Applied FOH Rate
13 FOH Rate = Total FOH Cost x 100 = Answer % {Based on Labor Cost}Labor Cost
14. FOH Rate = Total FOH Cost x 100 = Answer % {Based on Material} Material Cost
15. FOH Rate = Total FOH Cost x 100 = Answer %{Based on Prime Cost} Prime Cost
16. FOH Rate = Budgeted FOH Cost = Answer Rupees {Based on Labor Hours}
17.FOH Rate = Budgeted FOH Cost = Ans Rupees {Based on Machine Hours}
18. Per Unit Cost = Cost of Goods ManufacturedNo. of Units Produced
19. Re-Order Period = Lead Time
20.EOQ = Re-Order Quantity
21. Re-Order Level = (Max Consumption) x (Max Lead Time)
22.Max Stock Level == Re-Order Level – (Min Consumption) x (Min Lead Time) + EOQ
23.Min Stock Level = Re-Order Level – (Avg Consumption) x (Avg LeadTime)
24. Danger Stock Level = (Avg Consumption) x (Emergency Lead Time)
25.Average Stock Level= Min Stock Level + Max Stock Level
26. Average Stock Level = Min Stock Level + Re-Order Quantity
27. Average Stock Level = Min Stock Level + EOQ2
28. EOQ= 2 (Annual Units Consumption) x (Cost per Order)(Cost per unit of Material) x (Carrying Cost Percentage)
29. Safety Stock = (Annual Demand) x (Max Lead Time – Min Lead Time)365 x (Avg Lead Time)
30. Inventory Turnover Ratio= Material Consumed = Answer TimesAvg Inventory
31. Inventory Holding Period= No. of days in year / Iventory Turnover Ratio
Labor
Premium Bonus Plans
32.Halsey Bonus Plan = (Time Allowed – Time Saved) x (Rate per Labor Hour)
33. Halsey-Weir Premium Bonus Plan == (Time Allowed – Time Saved) x (Rate per Labor Hour)
34.Rowan Premium Plan
Step-I
Bonus Rate = Time Saved x 100 = Answer %Time Allowed
Step-II
Bonus Pay = (Basic Pay) x (Bonus Rate %) = Answer Rupees
Step-III
Now Total Pay = Basic Pay + Bonus Pay
Piece Rate System
35.Taylor's Differential Piece Rate Plan
If Efficiency > Standard then 120 % of Normal Piece Rate
= (Units Produced)x(Normal Piece Rate) + (1.20)x(Normal Piece Rate)
If Efficiency < Standard then 80 % of Normal Piece Rate
= (Units Produced)x(Normal Piece Rate) + (0.80)x(Normal Piece Rate)
30.Merrick's Differential Piece Rate Plan
If Efficiency 0 - 80% then Normal Piece Rate
= (Units Produced) x (Normal Piece Rate) + (Units Produced) x (Normal Piece Rate)
If Efficiency 81 - 100% then 10 % of Normal Piece Rate
= (Units Produced)x(Normal Piece Rate) + (Units Produced)x(0.10)x(Normal Piece Rate)
If Efficiency 100% - Above% then 20 % of Normal Piece Rate
= (Units Produced)x(Normal Piece Rate) + (Units Produced)x(0.20)x(Normal Piece Rate)
