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Unformatted text preview: revenue- expenses, evaluate using variable costing income statement (cm income stmt) Investment Center Generates revenue, incurs cost and makes capital expenditures, evaluate using return on investment, residual income, economic value added Economic Value-added Shareholder wealth value added Residual Income Operating income earn about return on investment Cost of Capital Minimum cash amount that we are will to take Formulas: Actual AC=AQ X AP Standard SC=SQ X SP Price Variance PV=AQ(AP-SP) Qty Variance QV=SP(AQ-SQ) Total Variance PV+- QV=TV ROI Operating Income/((Beg Inv + End Inv/2)) Residual Income Sales-Oper Exp Oper Inc-(Desired ROI)((Beg Inv + End Inv/2)) =RI Economic Value Added Sales-Oper Exp Oper Incc-(Cost Capital)(Total End Assets-Current Liab) =EVA Flexible Budget Sales-DM DL VFO = CM –FC = Oper Inc Variable Costing Income Statement Sales-Variable COGS-Variable Sales/Sell =CM-Fixed Factory Overhead-Fixed Selling =Operating Income...
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