**Cost Accounting Formulas And Terminologies**

1.**Prime Cost**= Direct Material + Direct Labor2.

2.**Total Production Cost**= Prime Cost + FOH Cost3.

3.**Conversion Cost**= Direct Labor + FOH Cost4.

4.**Raw Material Consumed**= Raw Material Opening + Material Purchases – Material Closing

5.**Manufacturing Cost**= Prime Cost + FOH Cost

{Same as Sr. No.2}

6.**Cost Of Goods Manufactured**= Manufacturing Cost + Opening WIP – ClosingWIP7.

7.**Goods Available for Sale**= Cost Of Goods Manufactured + Opening Finished Goods8.

8.**Cost of Goods Sold**= Goods Available for Sale – Closing Finished Goods9.

9.**Contribution Margin**= Sales – Variable Cost10.

10.**Income Statement**= Gross Profit – Operating Expenses11.

11.**Income Statement**= (Sale-COGS) – (Selling + Admin + MarketingExpenses)12.

12.**Applied FOH Rate**

13.**FOH Rate**= Total FOH Cost x 100 = Answer %

{Based on Labor Cost}

**Labor Cost**

14.**FOH Rate**= Total FOH Cost x 100 = Answer %

{Based on Material}

**Material Cost**

15.**FOH Rate**= Total FOH Cost x 100 = Answer %

{Based on Prime Cost}

**Prime Cost**

16.**FOH Rate**= Budgeted FOH Cost = Answer Rupees

{Based on Labor Hours}

17.**FOH Rate**= Budgeted FOH Cost= Ans Rupees{Based on Machine Hours}

18.**Per Unit Cost**= Cost of Goods ManufacturedNo. of Units Produced19.

19.**Re-Order Period**= Lead Time20.

20.**EOQ**= Re-Order Quantity21.

21.**Re-Order Level**= (Max Consumption) x (Max Lead Time)22.

22.**Max Stock Level**= Re-Order Level – (Min Consumption) x (Min Lead Time) + EOQ23.

23.**Min Stock Level**= Re-Order Level – (Avg Consumption) x (Avg LeadTime)24.

24.**Danger Stock Level**= (Avg Consumption) x (Emergency Lead Time)25.

25.**Average Stock Level**= Min Stock Level + Max Stock Level226.

26.**Average Stock Level**= Min Stock Level + Re-Order Quantity227.

27.**Average Stock Level**= Min Stock Level + EOQ228.

28.**EOQ**= 2 (Annual Units Consumption) x (Cost per Order)(Cost per unit of Material) x (Carrying Cost Percentage)29.

29.**Safety Stock**= (Annual Demand) x (Max Lead Time – Min Lead Time)365 x (Avg Lead Time)30.

30.**Inventory Turnover Ratio**= Material Consumed = Answer TimesAvg Inventory

31.**Inventory Holding Period**= No. of days in year = 365Inventory Turnover Ratio InventoryTurnover Ratio

**Labor**

**Premium Bonus Plans**

32.**Halsey Bonus Plan**= (Time Allowed – Time Saved) x (Rate per Labor Hour)233.

33.**Halsey-Weir Premium Bonus Plan**= (Time Allowed – Time Saved) x (Rate per Labor Hour)334.

**34.Rowan Premium Plan**

Step-I

Bonus Rate = Time Saved x 100 = Answer %Time Allowed

Step-II

Bonus Pay = (Basic Pay) x (Bonus Rate %) = Answer Rupees

Step-III

Now Total Pay = Basic Pay + Bonus Pay

Piece Rate System

**Notes to Absorption Costing:**

**Over/Under Applied FOH**

Budgeted Production (Budgeted units x Fixed FOH Rate/unit) XXXX

(-) Actual Production (Actual units x Fixed FOH Rate/unit) (XXXX)

Over/Under Applied FOH XXXX

**If Actual Production> Budgeted Production^Over Applied FOH**

If Actual Production < Budgeted Production ^ Under Applied FOHf.

If Over – Applied FOH ^ Minus from COGS at Actualg.

If Under – Applied FOH ^ Add in COGS at Actualh.

Absorption Costing leads to Gross Profit (GP) then Net Profit.

**Confusing Terminologies of Cost Accounting**

1.Inventory = Stock

2.Re-Order Period = Lead Time

3.EOQ = Re-Order Quantity

4.Standard = Budgeted

5.Marginal Costing = Direct Costing

6.Absorption Costing = Full Costing = Factory Cost = Production Cost

7.Total Production Cost = Manufacturing Cost

Dear,

above mentioned formulas are very help full for all of new student like me who are studying cost accounting thank your for your support.

Regards

Toufique Ahmed.