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  • Assisting Formula Sheet

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    This document lists and defines 12 common financial formulas used in business including formulas to calculate prime cost, conversion cost, gross profit, contribution margin, break-even point, degree of operating leverage, payback period, present value of annuity, net present value, and internal rate of return. Key formulas include prime cost equals direct materials plus direct labor, contribution margin equals sales minus variable costs, and break-even point equals fixed expenses divided by contribution margin per unit.

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    This document lists and defines 12 common financial formulas used in business including formulas to calculate prime cost, conversion cost, gross profit, contribution margin, break-even point, degree of operating leverage, payback period, present value of annuity, net present value, and internal rate of return. Key formulas include prime cost equals direct materials plus direct labor, contribution margin equals sales minus variable costs, and break-even point equals fixed expenses divided by contribution margin per unit.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    5 views1 page

    Assisting Formula Sheet

    Uploaded by

    ray
    This document lists and defines 12 common financial formulas used in business including formulas to calculate prime cost, conversion cost, gross profit, contribution margin, break-even point, degree of operating leverage, payback period, present value of annuity, net present value, and internal rate of return. Key formulas include prime cost equals direct materials plus direct labor, contribution margin equals sales minus variable costs, and break-even point equals fixed expenses divided by contribution margin per unit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Assisting Formulas

    1 Prime cost = Direct materials + Direct labor


    2 Conversion cost = Direct Labor + manufacturing overheads
    3 Gross profit = Sales – Cost of Goods Sold
    4 Contribution margin = Sales – Variable Costs
    5 BEP (n) = Fixed expenses / CM per unit BEP (n) = Fixed expenses / CM per unit
    6 Degree of operating = Contribution margin / Net operating income
    leverage
    7 % decrease in net = % decrease in sales x D.O.L
    operating income
    8 Payback Period (PP) = Investment required / Annual net cash inflow
    9 PVA = Annuity * PV IFA
    10 NPV = PVA – Investment required
    11 PI = NPV / Investment required
    12 The PV Factor for the IRR = Investment required / Annual net cash inflow

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