About This Chapter
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
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.
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.
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.
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.
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.
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.
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.
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Other chapters within the Accounting 303: Cost Accounting course
- Cost Classifications in Accounting
- Costing Methods & Techniques
- Standard Costs in Accounting
- Job Order Cost System in Accounting
- Process Cost System in Accounting
- Activity-Based Costing Overview
- Product & Service Costing
- Budgetary Process
- Cost Behavior Analysis
- Cost-Volume-Profit Analysis Overview
- Cost Estimation
- Service Department & Joint Cost Allocation
- Cost Accounting for Decision Making
- Ethics in Cost Accounting
- Modern Trends in Accounting
- Required Assignments for Accounting 303
- Studying for Accounting 303