# Managerial Accounting Equations Test 2

### 45 terms by dianaccamp

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### Y=FC + VC (X)

Mixed Cost Equation (also used in High-Low Method)

### DOL = total CM / NOI

Degree of operating leverage

### MOS in % = MOS in \$ / Total Budgeted or actual sales in \$

Margin of Safety Percentage

Margin of Safety

### VE ratio = VE / S

Variable Expense Ratio

### Unit S = (TP + FE) / Unit CM

Formula Method Target Profit (Units)

### \$ S = (TP + FE) / CM Ratio

Formula Method Target Profit (Dollars)

Unit CM

CM Ratio

### CM = S - VC

Contribution Margin

### BE in \$ = FE / CM Ratio

Break Even in Dollars

### BE in units = FE / Unit CM

Break Even in Unit Sales

### P = (S - VE) - FE :::: P = (Unit CM x Q) - FE :::: P = (CM Ratio x S) - FE

3 forms of Master Equation

### S = Pr x Q

How to Calculate S of Master Equation

### VE = unit V x Q

How to Calculate VE of Master Equation

Variable Cost

### unit-level

level of activity: performed each time a unit is produced, should be proportional to the number of units produced

### batch-level

level of activity: performed each time a batch is handled/processed, regardless of how many units there are in the batch

### product-level

level of activity: relate to specific products, typically must be carried out regardless of how many batches are run or units are sold

### Customer-level

relate to specific customers, not tied to any specific product

### Organization-sustaining

carried out regardless of customers, products, batches, or units (basically other)

### Unit level

power to run processing equipment

### Batch level

placing purchase orders

### Batch Level

setting up equipment

### batch level

arranging for shipments to customers

### product level

designing a product

### product level

maintaining a product manager and staff

sales calls

catalog mailings

### customer level

general technical support

### organization sustaining

heating the factory

### organization sustaining

cleaning executive offices

### organization sustaining

providing a computer network

### organization sustaining

arranging for loans

### organization sustaining

preparing annual reports to shareholders

### customer level

Sales representatives' periodic visits to customers to keep them informed about the services offered by CD express

### product level

ordering labels from the printer for a particular CD

### batch level

setting up the CD duplicating machine to make copies from a particular master CD

### unit level

Visually inspecting CDs and placing them by hand into protective plastic cases prior to shipping

### product level

preparation of the shipping documents for the order

### organization sustaining

periodic maintenance of equipment

### organization sustaining

lighting and heating the company's production facility

### organization sustaining

preparation of quarterly financial reports

Example: