MAC2601 Formulae & Equations

Stuvia.com - The study-notes marketplace



MAC2601 Formulae
STUDY UNIT 2 – Estimation techniques and the linear equation:

The linear equation:
𝑦 = 𝑎 + 𝑏𝑥

The high-low method:
𝑇ℎ𝑒 𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑐𝑜𝑠𝑡𝑠 𝑎𝑡 𝑡ℎ𝑒 ℎ𝑖𝑔ℎ𝑒𝑠𝑡 𝑎𝑛𝑑 𝑙𝑜𝑤𝑒𝑠𝑡 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑦 (𝑅𝑎𝑛𝑑 𝑣𝑎𝑙𝑢𝑒)
𝑇ℎ𝑒 𝑑𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 ℎ𝑖𝑔ℎ𝑒𝑠𝑡 𝑎𝑛𝑑 𝑙𝑜𝑤𝑒𝑠𝑡 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑦 (𝑢𝑛𝑖𝑡𝑠)


Simple regression analysis (least squares method): *given in the exam
2
∑ 𝑥𝑦 = 𝑎Σ𝑥 + 𝑏Σ𝑥 … … … … ①

∑ 𝑦 = 𝑎𝑛 𝑏Σ𝑥 … … … … … … . ②

STUDY UNIT 3 – Cost-volume-profit analysis:

Contribution:
Sales – total variable costs

Contribution ratio:
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
𝒔𝒂𝒍𝒆𝒔
× 100%

Profit can be calculated as:
Y = bx – a
Y = net profit (0 at breakeven)
B = contribution per unit
X = number of units sold
A = total fixed costs

Breakeven point in units:
𝑡𝑜𝑡𝑎𝑙 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡


Breakeven value:
breakeven value × selling price per unit

OR

𝑡𝑜𝑡𝑎𝑙 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑖𝑜

Margin of safety in units:
total sales(units) – breakeven sales(units)

Margin of safety in value:
total sales – breakeven sales

Margin of safety ratio in units (%):
𝑇𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠(𝑢𝑛𝑖𝑡𝑠)−𝑏𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑠𝑎𝑙𝑒𝑠(𝑢𝑛𝑖𝑡𝑠)
𝑇𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠(𝑢𝑛𝑖𝑡𝑠)
× 100

Margin of safety ratio in value (%):
𝑚𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑠𝑎𝑓𝑒𝑡𝑦 𝑖𝑛 𝑣𝑎𝑙𝑢𝑒
𝑡𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠(𝑣𝑎𝑙𝑢𝑒)
× 100



Downloaded by: M1nn1E |
Distribution of this document is illegal

, Stuvia.com - The study-notes marketplace


Target sales in units:
𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠+𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑝𝑟𝑜𝑓𝑖𝑡
sales units = 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡


Target sales in value:
𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠+𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑝𝑟𝑜𝑓𝑖𝑡
Sales value = 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑖𝑜



STUDY UNIT 4 – Material:

Average inventory:
1
× order size
2

Economic Ordering Quantity(EOQ):
2 × 𝑈 ×𝐶
√
𝐻 + (𝑃 × 𝑖)
U = annual usage(demand)
C = variable cost of placing order
H = other variable inventory holding cost (excluding interest) per annum per unit
i = interest rate or required return (used when provided)
P = purchase price per unit (used when provided)

STUDY UNIT 5 – Labour:

Overtime premium: 0,5 (normal rate is 1)

Budgeted labour recovery rate:
𝑇𝑜𝑡𝑎𝑙 𝑏𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑎𝑛𝑛𝑢𝑎𝑙 𝑙𝑎𝑏𝑜𝑢𝑟 𝑐𝑜𝑠𝑡
𝑇𝑜𝑡𝑎𝑙 𝑏𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑒 ℎ𝑜𝑢𝑟𝑠

Total budgeted annual labour cost:
Gross remuneration + employer contributions

Total budgeted annual productive hours:
Clock hours – idle time – public holidays – paid leave

STUDY UNIT 6 – Overheads:

Overhead recovery rate:
𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝑜𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑐𝑜𝑠𝑡𝑠
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 (𝑢𝑛𝑖𝑡𝑠)


STUDY UNIT 9 – The direct costing method versus the absorption costing method:

Opening inventory (FIFO – Absorption costing):
𝑈𝑛𝑖𝑡𝑠 𝑜𝑓 𝑐𝑙𝑜𝑠𝑖𝑛𝑔 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝑢𝑛𝑖𝑡𝑠 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑒𝑑
× 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡

OR

Opening stock units × (variable cost per unit + fixed cost per unit)

Closing inventory (FIFO – Absorption costing):
𝑈𝑛𝑖𝑡𝑠 𝑜𝑓 𝑐𝑙𝑜𝑠𝑖𝑛𝑔 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝑟𝑎𝑛𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡𝑠
𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑢𝑛𝑖𝑡𝑠



Downloaded by: M1nn1E |
Distribution of this document is illegal