# BUS-187 Exam 4

 Materials Price Variance (MPV) AQ(AP - SP) Materials Quantity Variance (MQV) SP(AQ - SQ) Total Materials Variance (TMV) (AQ x AP) - (SQ x SP) Labor Price Variance (LPV) AH(AR - SR) Labor Quantity Variance (LQV) SR(AH - SH) Total Labor Variance (TLV) (AH x AR) - (SH x SR) Total Overhead Variance Actual Overhead - Overhead Applied Actual Overhead Variable Overhead + Fixed Overhead Predetermined Overhead Rate Budgeted Overhead Costs ÷ Direct Labor Hours Overhead Applied Predetermined Overhead Rate x Standard Hours Allowed Make or Buy Analysis Costs ---> Choose Lower Amount and State the Net Income Effect Ex: DL, DM, Variable Manuf., Fixed Manuf., Purchase Price Reject or Accept Analysis Revenues - Costs ---> Choose Higher Net Income (or the one that isn't a Loss); State the Net Income Affect *Don't include fixed costs when operating at the same of full plant capacity. If fixed costs do change, include the difference in the change, NOT total fixed costs. If there are no changes to fixed costs, you should assume that it stays the same. Cash Payback Period Capital Investment ÷ Net Annual Cash Flow Net Annual Cash Flow Net Income + Depreciation Expense Depreciation Capital Investment ÷ # of Years Computation of Cash Payback Period Depreciation Expense - Cumulative Net Cash Flow; That Answer ÷ the Next Year's Net Annual Cash Flow = Decimal Amount. Add Decimal Amount for # Between the Years for Cash Payback Period Computation for Payback Period for Same Amount of Net Income Capital Investment ÷ (Total Net Income ÷ # of Years [Also Known as Net Annual Cash Flow]) = Cash Payback Period for Same Amount of Net Income Present Value Discount Factor x Net Annual Cash Flow Net Present Value Present Value - Capital Investment Net Present Value (Positive or Negative) Present Value of Net Annual Cash Flow - Capital Investment = Net Present Value; If the Net Present Value is positive, then the Investment should be made. If it is Negative, then the Investment should not be made. Retain or Replace Analysis Costs; Subtract Salvage Value from "Replace"; (Bracket) Costs in Net Income Effect, if larger than retain column. State the Net Income Effect Unfavorable Actual > Standard Favorable Actual < Standard Pick Smaller # for _________; Pick Larger # for ____ ________ / __________ Costs; Net Income / Revenues Future Value of 1 Table 1 Future Value of an Annuity of 1 Table 2; Use when period payments (receipts) are the same in each period. Present Value of 1 Table 3; Use when periodic cash flows are uniform in each period. Ex.: Same Net Income + Depreciation (Net Annual Cash Flow) Present Value of an Annuity of 1 Table 4; Use when periodic cash flows are not uniform in each period. Interest Principal (P) x Rate (i) = Time (n) Future Value p x (1 + i)n Present Value Future Value ÷ (1 + i)n AuthorAnonymous ID56221 Card SetBUS-187 Exam 4 DescriptionBUS-187 Updated2010-12-15T16:09:50Z Show Answers