Cost of Goods Manufactured and Sold Statement Formulas:

v Prime Cost = Direct Materials Cost + Direct Labor Cost

v Total Factory Cost or Manufacturing Cost = Direct Materials + Direct Labor Cost + Factory Overhead

v Conversion Cost = Direct Labor Cost + Factory Overhead Cost

v Cost of Goods Manufactured (COGM) = Total Factory Cost + Opening Work in Process Inventory – Ending Work in Process Inventory
Or
Cost of Goods manufactured = Direct materials cost + Direct labor cost + Factory overhead cost + Opening work in process inventory – Ending work in process inventory

v Cost of goods sold (COGS) = Cost of goods manufactured + Opening finished goods inventory – Ending finished goods inventory
Or
Cost of goods sold = Direct materials cost + Direct labor cost + Factory overhead cost + Opening work in process inventory – Ending work in process inventory + Opening finished goods inventory – Ending finished goods inventory

v Number of units manufactured = Units sold + Ending Finished Goods units – Opening finished goods units

v Per unit cost of goods manufactured = Cost of goods manufactured / Units manufactured

v Materials used or consumed = Opening inventory or materials + Net purchases of materials – Ending inventory of materials

Income statement formulas:

v Gross profit = Net sales – Cost of goods sold

v Operating profit = Gross profit – Operating expenses

v Operating or commercial expenses = Selling or marketing expenses + General or administrative expenses

v Per unit gross profit = Gross profit / No. of units sold

v Per unit net profit = Net profit / No. of units sold

v Percentage of GP to sales = (Gross profit / Net sales) × 100

v Percentage of net profit to sales = (Net profit / Net sales) × 100

Cost Volume Profit (CVP) Formulas:

v Contribution margin = Sales – Variable expenses (manufacturing and non-manufacturing)

v Net operating income = Contribution margin – Fixed expenses (manufacturing and non manufacturing)

v Contribution margin ratio = Contribution margin / Sales

v Break even point (units) = Fixed expenses / Unit contribution margin

v Break even point (dollar sales) = Fixed expenses / CM ratio

v Units sales to attain target profit = (Fixed expenses + Target profit) / Unit contribution margin

v Sales to attain target profit = (Fixed expenses + Target profit) / Contribution margin ratio

v Margin of safety = Total budgeted or actual sales – Break even sales

v Margin of safety percentage or margin of safety ratio = Margin of safety / Total budgeted or actual sales

v Degree of operating leverage = Contribution margin / Net operating income