MAFundamentals defines the foundation of Management Accounting from cost concept, classification and analysis. It provides general discussion on COST, VOLUME, PROFIT, VARIANCE and other information necessary for performance measurement, decision making and pricing.

Cost Management Ratios

One method of Financial Ratio Analysis, Cost Management Ratios measures how well is the control of the company's cost.


  1. Gross Profit Rate (or Gross Profit Percentage)
    FORMULASIGNIFICANCE
    Net Sales - Cost of Sales
    Net Sales     		Measures how much can be spent for marketing, R&D, and administrrative costs while still reaching target income.

  2. Labor Cost Ratio
    Labor Cost
    Net Sales     		Measures the percentage of labor cost to sales.

  3. Employment Growth Rate
    Number of Workers, 200B - Number of Workers, 200A
    Number of Workers, 200A     		Used as a measure of operational growth (as expressed in the number of workers). It is compared with the investment rate to determine whether capital is being substituted for labor.