MAE Formulaes

Marginal Costing Formulas:

Formula Name	Formula
Contribution	$\text{Contribution}=\text{Sales}-\text{Variable Costs}$
Net Profit	$\text{Net Profit}=\text{Contribution}-\text{Fixed Costs}$
P/V Ratio (Profit-Volume Ratio)	$\text{P/V Ratio}=\frac{\text{Contribution}}{\text{Sales}}\times 100$
Break-Even Point (BEP) (Value)	$\text{BEP (Value)}=\frac{\text{Fixed Cost}}{\text{P/V Ratio}}$
Break-Even Point (BEP) (Units)	$\text{BEP (Units)}=\frac{\text{Fixed Cost}}{\text{Contribution per unit}}$
Sales (Value)	$\text{Sales (Value)}=\frac{\text{Fixed Cost}+\text{Net Profit}}{\text{P/V Ratio}}$
Sales (Units)	$\text{Sales (Units)}=\frac{\text{Fixed Cost}+\text{Net Profit}}{\text{Contribution per unit}}$
Margin of Safety (MOS)	$\text{MOS}=\text{Total Sales}-\text{BEP Sales}$
Variable Cost per Unit	$\text{Variable Cost per unit}=\frac{\text{Change in Total Cost}}{\text{Change in Volume}}$

---

Inventory Management Formulas:

Inventory Management Variables:

• $D$: Demand Rate - The rate at which demand for the product occurs, typically expressed in units per time period (e.g., units per year).
• $S$: Ordering Cost - The cost associated with placing an order, regardless of the order size.
• $H$: Holding Cost - The cost of holding or storing inventory for a specific period, usually expressed per unit per time period.
• $Q$: Order Quantity - The number of units ordered in each order, often the Economic Order Quantity (EOQ) when optimizing inventory levels.

Formula Name	Formula
Economic Order Quantity (EOQ)	$EOQ=\sqrt{\frac{2DS}{H}}$
Reorder Level	$\text{Reorder Level}=\text{Lead Time Demand}$
Average Inventory	$\text{Average Inventory}=\frac{EOQ}{2}$
Total Inventory Cost	$\text{Total Inventory Cost}=\text{Ordering Costs}+\text{Holding Costs}$
Ordering Costs	$\text{Ordering Costs}=\frac{D}{Q}\times S$
Holding Costs	$\text{Holding Costs}=\frac{Q}{2}\times H$
Safety Stock	$\text{Safety Stock}=\text{Lead Time Demand}\times \text{Safety Factor}$

References

Information

• date: 2025.03.19
• time: 08:04