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Ch 3: Formulas for Cost Accounting

About This Chapter

Review this chapter as you go over the formulas for cost accounting. Whenever you use our learning materials, you can always assess your progress by taking the time to answer our lesson quizzes, which can determine your understanding of key terms, problem-solving, concept applications, and more.

Formulas for Cost Accounting - Chapter Summary

In order to account for different costs, you must understand the formulas used to determine those costs. This chapter provides an extensive overview of some of the most commonly used cost accounting formulas. Since there are a wide range of essential formulas, our instructors have carefully separated the chapter into individual lessons. Each lesson goes over a single formula, its purpose, and the related calculation steps. Since the lessons are clearly labeled, you can use the chapter menu to look up information on a specific formula that you need to understand for a homework assignment or for an upcoming exam. By the close of the chapter, you should be able to:

  • Describe the break even point formula
  • Identify the formula used to determine target net income
  • Analyze the steps for calculating gross profit margin
  • Define the contribution margin and its purpose
  • Examine the variance formulas used in cost accounting
  • Compare beginning inventory and ending inventory formulas

7 Lessons in Chapter 3: Formulas for Cost Accounting
Test your knowledge with a 30-question chapter practice test
How to Calculate the Break-Even Point - Definition & Formula

1. How to Calculate the Break-Even Point - Definition & Formula

The break-even point is an important measurement in understanding the health of a company. This lesson explains what the break-even point is, how the break-even point is calculated and the formula for determining the break-even point.

Target Net Income: Definition & Formula

2. Target Net Income: Definition & Formula

Watch this video to learn how a business figures out its target net income. We'll learn the formula as well as explore contribution margin and cost-volume-profit graphs.

How to Calculate Gross Profit Margin: Definition & Formula

3. How to Calculate Gross Profit Margin: Definition & Formula

In this lesson, you'll learn the purpose of calculating gross profit margin and explore its components. You'll also learn how to analyze the results of the calculation.

Contribution Margin: Definition & Formula

4. Contribution Margin: Definition & Formula

This lesson explains what a contribution margin is, how is it calculated, and how it affects the overall financial status of a business. An example is offered to help illustrate the importance of contribution margins.

Variance Formulas for Cost Accounting

5. Variance Formulas for Cost Accounting

Variance formulas can highlight differences between what's expected and what actually happens. This lesson analyzes price variance, efficiency variance, and variable overhead variance and explains what they can reveal about business performance.

Calculating Beginning Inventory: Formula & Explanation

6. Calculating Beginning Inventory: Formula & Explanation

One of the most important assets a company must protect and control is inventory. In this lesson, you'll learn how to calculate beginning inventory, which is the first step of accounting for inventory changes during an accounting period.

Calculate Ending Inventory: Formula & Explanation

7. Calculate Ending Inventory: Formula & Explanation

This lesson will outline the concept of ending inventory and how it is used in business. Also, we will take a look at a balance sheet and explore the way in which investors use it as tool to gain a high-level view of the status of their companies.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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