Exam 3 – Managerial Accounting

Cost of Investment/Annual Net Cash Inflows
Annual Depreciation
Cost – Residual Residual Value/Years
Accounting Rate of Return
Average Annual Net Income (17,900-11,696)/ Average Investment Cost (51000-3000)/2)+3000
Average Investment Cost
{(Total Investment – Residual Value)/2) + Residual Value}
Operating Income
Sales – Controllable Costs (COGS & Selling and Admin Expenses)
Cost of Capital
Profit Margin
Operating Income/Sales=%
ROI (Return on Investment)
Operating Income/Assets invested
Variance (Direct Materials Price Variance)
[(Standard price-Actual price) x Actual Quantity]
Variance (Direct Materials Quantity Variance)
[Standard Price x (Standard Quantity – Actual Quantity)]
Variance (Direct Labor Variance)
Standard Unit Cost
DL + DM + OH

pg. 1165

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