🧾 CA Inter Costing – Essential Formulas & Concept

Material Cost = Purchase Price + Freight + Taxes – Discounts + Other Expenses
EOQ (Economic Order Quantity) EOQ=2ABCSEOQ = \sqrt{\frac{2AB}{CS}}EOQ=CS2AB Where:
- A = Annual consumption
- B = Ordering cost per order
- C = Cost per unit
- S = Storage & carrying cost %
Stock Levels:
- Reorder Level = Maximum usage × Maximum lead time
- Minimum Level = Reorder Level – (Normal usage × Normal lead time)
- Maximum Level = Reorder Level + Reorder Quantity – (Minimum usage × Minimum lead time)
- Average Stock Level = Minimum Level + ½ Reorder Quantity

Time Wage System = Hours Worked × Rate per Hour
Piece Rate System = Units Produced × Rate per Unit
Incentive Schemes:
- Halsey Plan = Time Taken × Rate + 50% of Time Saved × Rate
- Rowan Plan = Time Taken × Rate + (Time Saved / Time Allowed) × Time Taken × Rate
Labour Turnover: Labour Turnover Rate=(Number of Employees Left or ReplacedAverage No. of Employees)×100\text{Labour Turnover Rate} = \left( \frac{\text{Number of Employees Left or Replaced}}{\text{Average No. of Employees}} \right) \times 100Labour Turnover Rate=(Average No. of EmployeesNumber of Employees Left or Replaced)×100

Overhead Rate = Overheads / Base Units (Labour hours, Machine hours, etc.)
Machine Hour Rate = (Total Machine-Related Overheads) / Machine Hours
Absorption Rate Methods:
- Labour Hour Rate
- Machine Hour Rate
- % of Direct Material Cost / Direct Labour Cost / Prime Cost
Under/Over Absorption = Actual Overheads – Absorbed Overheads

Prime Cost = Direct Material + Direct Labour + Direct Expenses
Factory Cost = Prime Cost + Factory Overheads
Cost of Production = Factory Cost + Admin Overheads (related to production)
Total Cost / Cost of Sales = Cost of Production + Selling & Distribution Overheads
Profit = Sales – Total Cost

Notional Profit = Value of Work Certified – (Cost of Work to Date)
Profit to be Recognized:
- <25% Completion: No profit
- 25%-90%: Profit to be transferred=Notional Profit×Cash ReceivedWork Certified×23\text{Profit to be transferred} = \text{Notional Profit} \times \frac{\text{Cash Received}}{\text{Work Certified}} \times \frac{2}{3}Profit to be transferred=Notional Profit×Work CertifiedCash Received×32
- 90% Completion: Estimate Total Profit × Work Certified / Contract Price × Cash Received / Work Certified

Cost per unit = Total Cost / Equivalent Units
Abnormal Loss / Gain = Normal Cost per Unit × Abnormal Units
Equivalent Units = Units × % of Completion (for materials, labour, overhead)

Contribution = Sales – Variable Cost
P/V Ratio = (Contribution / Sales) × 100
Break-Even Point (BEP):
- In Units: Fixed Cost / Contribution per unit
- In Sales: Fixed Cost / P/V Ratio
Margin of Safety (MOS) = Actual Sales – BEP Sales
Profit = (Sales – BEP Sales) × P/V Ratio

Material Cost Variance (MCV) = (Standard Price × Std Qty) – (Actual Price × Actual Qty)
Labour Cost Variance (LCV) = (Standard Rate × Std Hrs) – (Actual Rate × Actual Hrs)
Similar format applies for Usage, Rate, Efficiency, etc.