Comprehensive Guide to Budget Cost Formulas

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Comprehensive Formula Handbook for Budgeted Costs (I)
Contingency fund = Basic contingency fund + Price increase contingency fund
Basic contingency fund = (Project cost + Other costs related to project construction) × Basic contingency rate
Project cost = Cost of purchasing equipment and tools + Cost of construction and installation work
Price increase contingency fund: P = ΣIt, where It is the static investment in year t of the construction period, and f is the average annual price increase rate during the construction period.
Static investment = Project cost + Other costs related to project construction + Basic contingency fund
Investment direction adjustment tax = (Static investment + Price increase contingency fund) × Investment direction adjustment tax rate
Interest on loans during the construction period = Σ((Cumulative loans at the beginning of the year + New loans for the current year) ÷ 2) × Loan interest rate
Total investment in fixed assets = Static investment + Price increase contingency fund + Investment direction adjustment tax + Interest on loans during the construction period
Total investment for productive construction projects = Total investment in fixed assets + Working capital
Total investment for non-productive construction projects = Investment in fixed assets
Total cost of a construction project = Total investment in fixed assets + Working capital of the project
Working capital of a project = Total investment in fixed assets of the project × Working capital ratio relative to fixed assets
Effective interest rate = (1 + Nominal interest rate ÷ Number of times interest is calculated per year)^(Number of times interest is calculated per year) – 1 = (1 + r ÷ m)^m – 1
Working capital = Current assets – Current liabilities
Current assets = Accounts receivable (or prepaid accounts) + Cash + Inventory
Current liabilities = Accounts payable (or prepaid accounts)
Accounts receivable = Annual sales revenue ÷ Number of times inventory is rotated per year
Cash = (Annual wages and benefits + Other annual expenses) ÷ Number of times inventory is rotated per year
Inventory = Purchased raw materials and fuels + Work-in-progress + Finished goods
Purchased raw materials and fuels = Annual cost of purchased raw materials and fuels ÷ Number of times inventory is rotated per year
Work-in-progress = (Annual wages and benefits + Other manufacturing expenses + Annual cost of purchased raw materials and fuels + Annual repair costs) ÷ Number of times inventory is rotated per year
Finished goods = Annual operating costs ÷ Number of times inventory is rotated per year
Sales taxes and surcharges = Sales revenue × Tax rate on sales taxes and surcharges
Interest I = Total amount F – Principal P
Interest rate i = Interest earned in unit time λ ÷ Principal P × 100%
F = P(1 + i)^n
F = A ÷ i
P(1 + i)^n = A ÷ i
Return on investment R = Annual net income (or average annual income) ÷ Total investment × 100%
Return on total investment Ra = (F + Y) ÷ K × 100%
F = Normal annual sales profit； Y---Normal annual loan interest ； K---Total investment (capital expenditure + working capital). F = Sales revenue – Operating costs – Depreciation – Amortization – Taxes – Interest. Return on equity Re = F ÷ Q × 100%. Q---Equity. Static payback period Pt = K ÷ A. A---Net income in year ÿ = (CI – CO)t. Pt = (Number of years when cumulative net cash flow is positive – 1) + Absolute value of cumulative net cash flow from the previous year ÷ Net cash flow in the year when a positive value occurs. Dynamic payback period Pt = (Number of years when present value of cumulative net cash flow is positive – 1) + Absolute value of present value of cumulative net cash flow from the previous year ÷ Present value of net cash flow in the year when a positive value occurs. Interest coverage ratio = EBIT ÷ Interest payable for the current period. EBIT = Total profit + Interest expenses included in total costs and expenses. Interest payable for the current period = Total interest expenses included in total costs and expenses. Debt service coverage ratio = Funds available for debt repayment ÷ Amount due for debt repayment in the current period. Net Present Value Ratio NPVR = NPV ÷ Kp. Kp—Incremental present value of investment. Return on incremental investment R(2-1) = (C1 – C2) ÷ (K2 – K1) × 100%. Incremental payback period Pt(2-1) = (K2 – K1) ÷ (C1 – C2). Incremental payback period Pt(2-1) = (K2/Q2 – K1/Q1) ÷ (C1/Q1 – C2/Q2): In cases where business volume varies. Comprehensive expense method Sj=Kj+PcCj Average annual use cost = (P-LN) ÷N + average annual operating cost of equipment (P-LN) ÷N----average annual asset consumption cost of equipment P----current actual value of equipment LN---net residual value of equipment at the end of the Nth year Economic life N0=0.5 (2) Net cash flow of equipment leasing = sales revenue - operating costs - lease expenses - sales-related taxes - income tax rate × (sales income - operating costs - lease expenses - sales-related taxes) Lease expenses mainly = lease deposit occupation loss + rent + guarantee fee surcharge rate method: ÿperiod rent R=P(1+Ni)÷N+Pr=P(1÷N+i+r)P----The price of the leased asset N----The total number of lease terms i----The discount rate r corresponding to the total number of lease terms----Additional rate annuity method has two payment methods: Equal payments at the end of the period R = P (A÷P, i, N) Equal payments at the beginning of the period R = P (A÷P, i, N) ÷ (1 + i) Net cash flow for purchasing equipment = sales revenue - operating costs - equipment purchase fees - loan interest - taxes related to sales - income tax rate × (sales revenue - operating costs - depreciation - loan interest - taxes related to sales) Profit (B) = sales revenue - total cost - tax Sales revenue = selling price per unit lambda (p) × sales volume (Q) Total cost = variable cost + fixed cost = variable cost per unit lambda (Cv) × output (Q) + fixed cost (CF) Sales tax = (single lambda product sales tax + single lambda product value-added tax) × sales volume (Q) B = pQ-CvQ-CF-tQ Break-even point BEP expressed in production and sales volume (Q) = CF÷(p-Cv-t) Break-even point BEP expressed in production capacity utilization rate (%) = Break-even point sales volume ÷ normal production volume × 100% BEP (%) = annual total fixed cost ÷ (annual sales revenue - Annual variable cost - Annual sales tax and surcharge - Annual value-added tax) BEP (Q) = BEP (%) × Design production capacity Break-even point expressed in sales BEP (S) = p × CF÷ (p-Cv-t) Sales unit price BEP (p) = Annual total fixed cost ÷ Design production capacity + Single lambda product variable cost + Single lambda product sales tax and surcharge + Single lambda product VAT CE = SE÷LCC, LCC=IC+SCCE----cost efficiency SE----engineering system efficiency LCC---project life cycle cost IC----setup fee SC----maintenance fee (3) Enterprise project cost assessment indicators Project design cost reduction amount = project design contract cost - project design budget cost Project design cost reduction rate = project design cost reduction amount ÷ project design contract cost × 100% project construction cost reduction amount = project construction contract cost - project actual construction cost Project construction cost reduction rate = project construction cost reduction amount ÷ item Project construction contract cost × 100% project manager department’s controllable responsibility cost assessment indicator target total cost reduction = project manager’s responsibility target total cost – project completion settlement total cost target total cost reduction rate = target total cost reduction ÷ project manager’s responsibility target total cost × 100% construction The actual reduction of the construction responsibility target cost = the total construction responsibility target cost - the total cost of project completion settlement The actual reduction rate of the construction responsibility target cost = the actual reduction of the construction responsibility target cost ÷ the total construction responsibility target cost × 100% The actual reduction of the construction plan cost = the total construction plan cost - The actual reduction rate of the total cost of the project completion settlement and the construction plan cost = the actual reduction of the construction plan cost ÷ the total construction plan cost × 100% The completion rate expressed in value form = (the target total cost of the completed project - the target cost settled in the previous year) ÷ the total target cost of the completed project this year × 1 00% income problem of construction enterprises Enterprise income = main business income + other business income Main business income = construction contract income other business income = sales of products or materials + provision of jobs or services + non-operating income such as leasing fixed assets = fixed asset inventory profit + fixed disposal Net income from assets + Net income from disposal of intangible assets + Net income from fines Construction contract income = Initial income + Additional income Additional income = Contract changes + Claims + Incentives, etc. Recognition of contract income and expenses using the percentage of completion method Contract completion progress = Cumulative actual contract costs ÷ Estimated contract total This × 100% (input measurement method) contract completion progress = Completed contract work quantity ÷ Contract estimated work volume × 100% --- Output measurement method Contract revenue recognized in the current period = Total contract revenue × Completion progress - Accumulated revenue recognized in previous fiscal years Contracts recognized in the current period Profit = (total contract revenue - estimated total cost of the contract) × completion progress - cumulative recognized revenue in previous fiscal years Contract expenses recognized in the current period = contract revenue recognized in the current period - contract revenue recognized in the current period - total estimated loss provision profit in previous fiscal years = operating profit + investment Net income + net non-operating income and expenses Net profit = total profit - income tax Operating profit = project settlement profit + other business profits - administrative expenses - financial expenses Project settlement profit = project price income - actual project cost - project settlement tax and other additional business profits = net investment income =Investment income - Investment losses Net non-operating income and expenses = Non-operating income - Non-operating expenses Non-operating income = Fixed asset inventory surplus + Net sales income + Accounts payable that cannot be paid due to creditors + Penalty income + Additional refunds for education fees + Other non-operating income and non-operating expenses = Net sales interest rate = Net profit ÷ Sales revenue × 100% sales ë Interest rate = × 100% Net interest rate on assets = (Net profit ÷ Average total assets) × 100% Average total assets = (Total assets at the beginning of the period + Total assets at the end of the period) ÷ 2 Net interest rate on assets = Net sales interest rate × Asset weekly Conversion rate Net interest rate on equity (return on net worth or return on equity or return on net assets) = Net profit ÷ Average owners’ equity Average owners’ equity = (Net assets at the beginning of the year + Net assets at the end of the year) ÷ 2 Net interest rate on equity = Net interest rate on assets × Equity multiplier Equity multiplier = 1 ÷ (1 - Asset-liability ratio ) Net interest rate on equity = Net sales interest rate × Asset turnover rate × Equity multiplier Asset-liability ratio = (Total liabilities ÷ Total assets) × 100% equity ratio = (Total liabilities ÷ Shareholders’ equity) × 100% Interest earned multiple (interest coverage coefficient) = Profit before interest and tax ÷ Interest expense length Ratio of current liabilities to working capital = long-term liabilities ÷ (current assets - current liabilities) Business tax payable = taxable turnover × applicable tax rate Corporate income tax payable = total income - amount of allowed deduction items Total income = production income + operating income + property transfer income + profits Interest income + leasing income + royalty income + dividend income + other income Items allowed to be deducted = cost + expense + tax + lost land appreciation amount = transfer income - deducted item amount Deed tax payable = tax calculation basis × tax rate Equipment purchase fee = original price of equipment + equipment transportation and miscellaneous expenses