**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.

thanks