#cost formulas

[academic-corner-of-unicattl]

Managerial Accounting and Control – Key Concepts

Financial vs. Managerial Accounting

Financial accounting and managerial accounting serve different purposes.

Users:

Financial accounting produces standardized reports (balance sheet, income statement, cash flows) for external users – investors, creditors, regulators – and follows GAAP/IFRS rules .

In contrast, managerial accounting provides detailed analyses to internal management to aid decisions .

Time focus:

Financial reports are wholly historical (past periods) , whereas managerial accounting uses historical data plus budgets and forecasts to look forward . Precision & Detail: Financial statements aggregate data into broad categories (e.g. total “Cost of Goods Sold”), while managerial reports drill down into products, segments, or activities with granular detail .

Regulation:

Financial accounting is highly regulated for public disclosure; managerial accounting is flexible and not bound by external standards . Common mistakes include treating managerial data as audited (it may involve estimates) or ignoring relevant internal details in financial reports.

Planning, Controlling, and Decision-Making Framework

Managerial accounting is built on three pillars:

Planning,

Controlling,

Decision-making .

In planning, managers set targets and budgets (sales forecasts, production schedules). In controlling, they compare actual performance to these targets and use variance analysis to identify issues. Decision-making uses cost analyses (e.g. break-even, make-or-buy) to choose among alternatives. For example, a sales budget drives production and labor plans; exceeding the sales target might trigger bonuses, while falling short can reduce compensation . Overall, this framework ensures efficient use of resources and aligns operations with strategy. (Common errors include not updating budgets when conditions change or ignoring both quantitative and qualitative decision factors.)

Cost Classifications: Direct vs Indirect; Fixed vs Variable vs Mixed

Costs are classified by traceability and behavior. Direct costs can be traced easily to a product or service (e.g. raw materials in a product, wages of assembly workers) . Indirect costs cannot be traced to one product (e.g. factory rent, electricity, supervisor salaries) and are usually allocated as overhead . By behavior, variable costs change in total with volume (e.g. shipping costs per unit, $1 per unit cups) , while fixed costs stay the same in total across the relevant range (e.g. $3,500 rent per month) . A mixed (semi-variable) cost has both parts (e.g. a utility bill with a fixed base fee plus usage charge) . Within the relevant range, total cost can be modeled as:

Total Cost = Fixed Cost + (Variable Cost per Unit × Number of Units)

Manufacturing vs. Non-manufacturing Costs

In manufacturing firms, manufacturing (product) costs include three categories:

Direct Materials: Raw materials that become part of the finished product (e.g. wood for furniture) .

Direct Labor: Labor costs of workers who physically make the product (e.g. machine operators) .

Manufacturing Overhead: All other factory costs (indirect materials, indirect labor, utilities, depreciation of equipment, factory insurance, etc.).

The sums of these are often grouped: Prime cost = DM + DL , Conversion cost = DL + MOH , and Total manufacturing cost = DM + DL + MOH . Non-manufacturing (period) costs include selling and administrative expenses. For example, marketing/advertising and sales staff salaries are selling costs, while executive pay and office utilities are administrative costs . These are not tied to production.

Product Costs vs. Period Costs

All costs are ultimately either product costs or period costs. Product costs are the manufacturing costs (DM, DL, MOH) that are inventoriable: they are capitalized on the balance sheet as inventory and expensed as Cost of Goods Sold when sold . For example, direct materials and factory overhead on a product become part of inventory. In contrast, period costs are non-manufacturing expenses that are expensed in the period incurred . These include SG&A like office rent, advertising, and CFO salary . In short: if a cost is related to making a product, it’s a product cost; otherwise it’s a period cost . A common error is mislabeling costs (e.g. treating office rent as product cost instead of period).

Managerial Perspectives

Managers use accounting within broader business contexts. Key perspectives include:

Ethics: Managerial accounting depends on trust and integrity. Ethical behavior is “the foundation of managerial accounting” – biased or falsified data render all analysis meaningless . Professional accountants follow codes (IMA/CIMA) that stress honesty, fairness, and responsibility . Always question whether data is complete and reported objectively.

Strategy: Accounting supports strategy by linking numbers to the company’s competitive plan. Strategy is a firm’s “game plan for attracting customers by distinguishing itself from competitors” . Cost reports help choose which products or segments to invest in. For instance, a low-cost producer strategy would emphasize activity-based costing to cut unnecessary overhead, while a differentiation strategy might allocate more to quality metrics.

Enterprise Risk Management (ERM): Managers identify and quantify risks (market, credit, operational) and plan responses. ERM is defined as “a process used by a company to identify its risks and develop responses to them to be assured of meeting its goals” . Relevant costs include potential losses, insurance, or contingency budgets. Accounting data is used to forecast how different risk scenarios affect profits.

Corporate Social Responsibility (CSR): Companies consider social, environmental, and stakeholder impacts. CSR means managers consider “the needs of all stakeholders when making decisions” . For example, waste disposal or carbon emissions may be tracked as part of costs (using full-cost or environmental costing methods). Non-financial metrics (customer satisfaction, community impact) complement financial reports in a CSR perspective.

Process Management: This involves streamlining business processes (like Lean). A business process is “a series of steps followed to carry out some task” . Managerial accounting measures costs and performance at each process step (e.g. cost per production line, cycle time). By analyzing process costs, managers can eliminate bottlenecks. For example, tracking cost per unit by process highlights inefficiencies.

Leadership: Beyond numbers, managerial accountants often advise and lead teams. Leadership skills help interpret data, communicate insights, and motivate employees toward goals. As one teaching note suggests, leadership skills allow managers to unite people and implement the firm’s strategy (e.g. fair compensation systems that reward performance) .

Each perspective guides what and how information is reported. For example, ethical issues remind managers to exclude sunk costs and report honestly; strategic context determines which segments matter most; ERM reminds us to include contingency costs; CSR adds measures beyond profit; process management focuses on continuous cost reduction; and leadership ensures the data drives action.

Cost Behavior Analysis and Relevant Range

Understanding cost behavior is crucial for forecasting. The relevant range is the normal operating span in which our cost assumptions hold . Within this range, fixed costs are fixed (in total) and variable costs scale linearly. For example, if a machine produces up to 1,000 units/day, costs (like depreciation or utilities) can be estimated reliably up to that point; beyond it, new costs (a second machine) would emerge, altering the cost function . Typical mistake: applying a fixed-cost assumption far outside the relevant range (e.g. assuming one factory rent covers 200% capacity).

The high-low method estimates mixed costs using only the highest- and lowest-activity data points . Steps: (1) Identify the periods with highest and lowest activity and note their total costs. (2) Compute the variable cost per unit as:

( Cost_high – Cost_low ) ÷ ( Activity_high – Activity_low )

For example, if maintenance cost was $1,060 at 1,460 units and $932 at 1,100 units, the variable cost/unit = (1,060–932)/(1,460–1,100) = $0.356 . (3) Calculate fixed cost by subtracting total variable cost from one of the totals. Using the high point: $1,060 – (1,460×0.356) = $540 fixed . (4) Write the cost formula: Total Cost = $540 + $0.356 × Units . Note this approximation uses only two points (ignoring the shape between), so it may be rough if data are erratic .

Differential, Opportunity, and Sunk Costs

When making decisions, not all costs are relevant.

Differential (Incremental) Cost: The difference in cost between two alternatives. E.g. if Option A costs $10,000 and B costs $8,000 annually, the differential cost of A vs. B is $2,000 . Similarly, differential revenue is the revenue difference. Decisions are based on comparing differential revenues and costs.

Opportunity Cost: The foregone benefit when one alternative is chosen over another. It isn’t recorded in accounting books but is crucial. For example, quitting a $25,000 job to return to school incurs an opportunity cost of $25,000 (the lost salary) . Every choice has one – e.g. using a machine for product A means losing whatever B it could have made. Managers should include opportunity costs as relevant (e.g. the rental income given up by using a building for production).

Sunk Cost: A cost already incurred and unchangeable by current decisions. For example, a machine bought years ago is now obsolete; its original purchase price cannot be recovered . Sunk costs should be excluded from decision analysis because they remain the same regardless of the choice . A common pitfall is letting sunk costs (like past R&D) influence new decisions; instead, focus on future costs and benefits.

In summary: use differential and opportunity costs in “what-if” analyses (they are relevant), but ignore sunk costs (they are irrelevant) .

Contribution Margin and Income Statement Formats

Contribution Margin (CM) is defined as Sales – Variable Costs .

It represents the amount available to cover fixed costs and contribute to profit. For example, if a product sells for $100 and has $40 of total variable cost (materials, labor, commissions), the contribution margin is $60 per unit . CM can be expressed in total, per unit, or as a ratio (% of sales) . It’s widely used for break-even and target-profit analysis (e.g. Break-even units = Total Fixed Costs ÷ CM per unit).

There are two common income statement formats: Traditional (absorption) and Contribution (variable costing). Both yield the same net income, but differ in presentation .

Traditional Income Statement: Used for external reporting. It first subtracts product (COGS) from sales to get Gross Profit, then subtracts period costs (selling & admin) to get net income. Expenses are grouped as product vs. period costs.

Contribution Income Statement: Used internally for decision-making. It first subtracts all variable costs from sales to get Total Contribution Margin, then subtracts total fixed costs to arrive at net income. Here expenses are classified by behavior (variable vs. fixed) .

Both statements reconcile to the same profit, but the contribution format highlights how volume affects profit. A typical mistake is misallocating fixed costs or failing to separate variable costs when preparing these statements, which can obscure break-even analysis.

[eterniravioli]

charles telling george about oscar’s overtake

“you’ll see, his overtake is really good.”

[maxlarens]

Hi ! As a pescatarian girly and as someone who has recently started to like Lando, I kept thinking about him with pescatarian!reader, because you know opposites attracts and also it made me think of the olive theory from 'How I met your mother', can be fic or smau

(also I'm the anon who requested the Charles fic and I was wondering if you gave names or emojis to your anons 🤔)

ahhh hi😇😇 thank u sm for sending another ask in. verrryy into this! ive never watched himym but i HAVE heard of the olive theory and genuinely think it can be so true. i also think like sharing food/giving certain parts of ur meal to ur partner is so sweet so i loved this a lot🥺🥺

also, tbh i have never had a consistent enough anon to name them/give them an emoji so i would loveee LOVE to do that🙏🏻 pls let me know what i should call u❤️ (and if anyone wants to be a regular/semi-regular anon and give themselves an emoji/name pls do!!!) ANYWAY alright i hope u enjoy— it’s a just a short ficlet 😌💖

LN: quid pro quo

pairing(s): lando norris x reader [read on ao3]

word count: 1.2k

“Eugh,” Lando says, feigning a gag as he looks at the plate of food set in front of you, “That’s disgusting. I don’t understand how you can put that in your mouth.”

Slowly, you raise an eyebrow at him, looking between your plate and Lando’s screwed-up expression; you point at your food, “Salmon? You think salmon is disgusting? Are you joking right now?”

He shakes his head fervently, a grimace still stuck on his face, “It’s gross.”

A laugh, loud and guffawing erupts from your mouth as you realise he’s being entirely serious. He’s fixated on your meal, frowning as if the fish has severely insulted him in some way. Quickly, you clap your hand over your mouth, concerned you’ll offend him if you keep laughing like that. This is one of a handful of dates you’ve been on together— clearly the first you’ve ordered seafood on— and you’re still trying to make a good impression on Lando.

“Wait,” you collect yourself, breathing deeply so you don’t fall into a fit of giggles again, “You’re not allergic are you?”

“No,” he shrugs, “I just hate fish. You’ve never heard that?”

You snort a little indelicately, already going back to eating your salmon, “‘You’ve never heard that?’,” you tease, “Do you think I stalk you on the internet, Norris?”

He grins that small sheepish grin you like so much as a light blush blooms on his cheeks. You’re very fond of him really. He’s cute in a scrappy kind of way; he’s funny and charming, a little bit dumb sometimes; and he’s into you, which is always a bonus. You’re not together— not quite— just seeing each other when you both have time, but it’s been going very nicely if you do say so yourself.

You like him.

He likes you.

Lando rolls his eyes, and purses his lips in an attempt not to let you see the smile that he’s trying to hide, “Don’t you? Stalk me on the internet?”

“Never,” you answer resolutely, thinking blatantly of that night after you’d first met him when you fell down a rabbit hole, spending a good hour watching thirst traps of him on Instagram before coming to your senses, “Not once.”

He hums, unconvinced, “Alright.”

Alright. You make a face, almost stick your tongue out at him but think better of it at the last second. He laughs— giggles— at you. You look away from him, down at your plate, trying to hide the smile that spreads and spreads behind your hair. God, you like him. You’re trying not to let it get away from you. You get the impression that he’s not huge on relationships, and you’re trying hard to be casual about him. It’s difficult— mostly because everything feels so easy when you’re together.

“So,” you start as you push a forkful of salmon and leafy greens around your plate, “Hate to break it to you, but I’m a pescetarian.”

“Um,” Lando asks around a mouthful of half-chewed food, “What’s that mean?”

You stifle a laugh, “Like a vegetarian, but I eat seafood.”

He swallows and makes another face, similar to the earlier one. You can see this is hard for him to process, he clearly dislikes seafood to a degree that you hadn’t quite understood until now. It’s funny. It’s another thing to add to the growing list of reasons you fancy Lando Norris. Though you would think that as a pescetarian you’d want him to like fish, but you suppose by not eating them he’s just saving all the sea animals that you’re not— quid pro quo.

“What about, like,” he waves his fork around, evidently still wondering why you’d eat seafood voluntarily, “just being a vegetarian?”

You shrug, “Vegetables are boring.”

“Right. Better than eating fish though.”

“I like fish.”

He shakes his head, “I don’t get it… It’s— they’re slimy and they smell and they’ve got fucking beady little eyes. It’s not natural.”

“Okay,” you laugh brightly at his despondent expression, “I do need to eat them, unfortunately. Otherwise, I’d probably die of malnutrition, or I dunno, scurvy.”

He groans, hanging his head so that all you can see of his face is that mop of brown curls. You think of your second date when you’d kissed him for the first time in your stairwell and how you’d threaded a hand into it— and they were soft and not heavy with product the way that you hate. The way he’d smelt like expensive cologne and tasted both smokey and sugary at the same time, just like the whiskey and cokes he’d been having at the bar. There’s a soft smile playing at your lips when he finally looks up.

“Does it bother you?” you ask, “That I eat fish.”

He shrugs, shakes his head in a non-committal way that could be either answer and does that little grin again. The one that means he’s going to say something that you’ll find either unbearably cute or embarrassingly funny.

“Yes,” he says, grin not subsiding, “How am I supposed to kiss you when you’ve got fish breath.”

Your eyebrows shoot up and a shocked laugh bubbles from your mouth, you try to ignore the stirring feeling in your gut at the words how am I supposed to kiss you in favour of responding to his lack of tact Try, being the keyword there. It somersaults in your head, how am I supposed to kiss you he said, like he was thinking of doing it again. Which, okay, of course, he’s thinking of doing it again. You understand what this is— but there was an unmistakable fondness there that you just can't shake.

Anyway, you push thoughts of kissing him aside, he’d still accused you of having fish breath, “Wow,” you say dryly, with no malice at all as much as you try to feign it, “You say that to all the girls?”

He blushes, his tan cheeks turning a very pleasant red as he properly realises what he’d said, “Shit. No— oh my god— I’m sorry. I just meant—”

You wave him off, laughing, “I know what you meant. You’re good, Lando.”

“Phew,” he lets out a breath of relief, his nervous laughter punctuating the air between you, without meaning to he says, “God, I thought I’d just fucked it.”

You furrow your brows and frown, confused, “No. You couldn’t.”

You watch him scrub a hand over his face, embarrassed, before it falls away and he gives you a sheepish little grin that says he’s happy to hear that. Toothy, eyes squinted and carving dimples into his cheeks. Your face feels warm and you smile back, biting your bottom lip on the smile so it doesn’t grow and grow to cover your whole face.

Later, after you’ve finished lunch and spent too much time talking over a too-sticky table in your favourite pub, Lando kisses you up against a tree in the park by your apartment. You put your hand in his soft curls and you smell cologne and taste what he’s been drinking as he presses his tongue into yours. The coarse hair of his moustache brushes against your lips and you kiss back with equal gusto. You pull away when it feels like you two are veering into too inappropriate territory for this public park. He chases you, but you laugh softly, pressing a perfunctory closed-mouth kiss to the corner of his mouth. He groans, laughs, and puts his forehead against yours.

You hum, “I guess my fish breath doesn’t bother you so much, huh.”

“Fuck,” he breathes, “You’re never going to let that go are you.”

You shake your head ever so slightly, “Not as long as I live, Norris.”

[versatancore]

sebastian : i have something to tell you.

kimi *not even looking up* : we're not going to adopt oliver.

sebastian : BUT YOU DON'T UNDERSTAND! HE'S SO SWEET AND INNOCENT!!

kimi *looking at charles* : i'm not falling for that again.

[tthesongofachilless]

LOGAN

REINCARNATION OF NICO ROSBERG HELLO???? LOGAN GROW YOUR HAIR OUT MORE PLEASE!!!

[justc2world]

Oh Carlos 🥹

[formulanni]

MY TAROT CARDS ARE NOW AVAILABLE!!!

For those who have been asking they are now available at the link ⬇️! Due to production costs these are limited edition but they’ll probably stay up until January. If you want a piece of the cards but don’t want a whole deck/can’t justify buying a whole deck all if the cards are prints on my shop and there’s also a poster of all of them!!!!!

[terrylvr]

Please, Please, Please, Let Me Get What I Want - The Smiths | Charles Leclerc/Lestappen

[justafewberries]

the price of a sponsored gift increases 38%/day in the 50th hunger games according to wyatt callow. if we assume this is still true in the 74th games, and we assume on day 1, the feast Katniss and Peeta received in the cave would have costed $1000 (likely a gross under estimate, but for simplicity's sake, we'll make it $1000) it means on day 13, their feast costed $65,830.65. According to the excerpt above, we know it actually costs much, much more. She says "a meal", not the feast, or multiple meals from the cave.

now let's do district 11's bread after rue's death. I'll be more conservative and assume it costs $100 to send someone bread on day 1, as bread is something katniss finds at the cornucopia. it is something more reasonable than the burn cream or a special weapon, like finnick's trident. Assuming it costs $100 to send bread on day 1, and that Katniss receives the bread on day 9, it would have costed the people of district 11 $1,815.15.

[queenofvrooms]

Happy Japanese Grand Prix weekend!!

Have two wishes for this weekend:

1. Yuki has an amazing race at his HOME GP in his FIRST race for Red Bull

2. Charles has an amazing race at his 150th GP in F1 (especially considering his personal history with this race/track)

Would also like a good race for Lewis and all the babies AKA rookies

[cherrycolazwr]

on lewis' side of the divorce but god do i understand nico

[russellradio]

*I would like to see the baby*

Sky:

[sunny-sainz]

this interview just shows how humble and self aware carlos is. he knows how privileged he is from his father and always tells people that he knows it, being incredibly appreciative all the time. he doesn’t let that privilege get to his head at all. i really don’t get why people hate him when he’s the sweetest one of them all

[luidilovins]

Conservatives better get really comfortable with infantacide real quick. Abortion rights as well as other forms of birth control are under threat and sex education in schools is abysmal by design. People can't afford to feed themselves let alone spend upwards of $50 dollars on baby formula.

CPS already doesn't do their job, the foster system is overloaded and federal goverment spending is expecting to drop to 6% by 2033. The adoption process is predatory, lengthy and tedious and costs $20 grand and babies who are nonwhite are less likely to be adopted as well as babies with visible disabilities.

Conservatives better get comfortable with increased cases of shaken baby syndrome, repeaded child abuse and neglegence, kids that go to school hungry because their parents aren't feeding them, children getting dropped off at a realtive's house or daycare and their parents not coming back for them, babies being born with developmental malformation from failed at home abortion and acute withdrawl from drug or alcohol use.

"In 2021, 31 babies were placed in dumpsters, found in backpacks, or discarded in other dangerous locations. 22 of these infants were found deceased." -National Safe Haven Alliance

Republican conservatives better start getting comfortable with more people throwing their newborns into trash cans or leaving them on the side of the road or snuffing them with a pillow because even if you can force people to have babies you can't force people to raise them. You can throw that person in prison, but the US's obsession with crime and punishment does not take preventative action, nor does it reverse time.

For whatever reason they didn't want that kid. That's what the birth control was for.

[schumi-nadal]

Summary of the F1 Grid Does Secret Santa:

Everyone: *judging the packaging, unwrapping and thanking whoever gifted it*🙂

Franco: *not only unwrapping but also opening his puzzle and modeling clay* Oooooooh i'm gonna make a Williams for Carlitos 🤗✨💙

[littlegrapejuice]

Wdym we finally have the full '25 grid

🧍🏻‍♀️