Cost Accounting Cheat Sheet

Variances ¿ Expenses
CM Ratio
Material Price Variance:
Unit Sales to attain the target profit
AQ (AP-SP)
¿ Expenses +Target Profit
Material Quantity Variance:
Unit Contribution Margin
SP (AQ – SQ)
Dollar sales to attain target profit
Labor Efficiency Variance
¿ Expenses +Target Profit
SR (AH-SH) CM Ratio

Variable Overhead Efficiency Margin of Safety

Variance Margin of Safety=Total budgeted sales−Break Even sales

SR (AH-SR) Margin of Safety Percentage

Sales Price Variance Margin of Safety ∈Dollars

Total budgeted sales
ActSalesVolume(Actualsalesprice–
expectedsalesprice)
Operating Leverage

Sales Volume Variance

Degree of Operating Leverage

Budgetcontributionmar(actsalesvol-
budgetsalesvolume)
Contribution Margin
Net Operatin Income
Transfer Pricing
Auditing Techniques
Sellers Perspective

Transfer price ≥ variable cost/unit +

Total Contribution Margin on lost sales
number of units transferred
Purchaser’s Perspective

Transfer pricing ≤ Cost of buying

from outside supplier

Cost Volume Profit Analysis

Contribution Ratio:
Contribution Margin
Sales
Break Even point in units sold

¿ Expenses
Unit Contribution Margin
Break Even Point in total sales
dollars: