A100 Exam 1 Formulas Study Guide with Practice
Questions and Correct Answers
Simple Income Statement - CORRECT ANSWER -revenue - expenses = net
income/loss
Multi-Step Income Statement - CORRECT ANSWER -sales - costs of goods sold =
gross profit - operating expenses = net income/loss
Contribution Margin Income Statement - CORRECT ANSWER -Sales - variable costs
= contribution margin - fixed costs = net income/loss
Total product costs - CORRECT ANSWER -direct materials + direct labor +
manufacturing overhead
Break even point in units - CORRECT ANSWER -total fixed costs / contribution
margin per unit
Sales in units to achieve a target profit - CORRECT ANSWER -(total fixed costs +
target profit) / contribution margin per unit
Return on Investment - CORRECT ANSWER -operating income / average operating
assets
Residual Income - CORRECT ANSWER -operating income - (minimum rate of return
X average operating assets)
Questions and Correct Answers
Simple Income Statement - CORRECT ANSWER -revenue - expenses = net
income/loss
Multi-Step Income Statement - CORRECT ANSWER -sales - costs of goods sold =
gross profit - operating expenses = net income/loss
Contribution Margin Income Statement - CORRECT ANSWER -Sales - variable costs
= contribution margin - fixed costs = net income/loss
Total product costs - CORRECT ANSWER -direct materials + direct labor +
manufacturing overhead
Break even point in units - CORRECT ANSWER -total fixed costs / contribution
margin per unit
Sales in units to achieve a target profit - CORRECT ANSWER -(total fixed costs +
target profit) / contribution margin per unit
Return on Investment - CORRECT ANSWER -operating income / average operating
assets
Residual Income - CORRECT ANSWER -operating income - (minimum rate of return
X average operating assets)
