Chapter4AbsorptionCostingandVariableCostingCostandManagementAccountingLearningObjectives

01Understandthebasicconceptsofabsorptioncostingandvariablecosting.02Explainthedifferencesbetweenabsorptioncostingandvariablecosting.03Summarizetheadvanteges&limitationsofabsorptioncostingandvariablecosting.321

Part1:

ConceptsofAbsorptionandVariablecostingChapter4AbsorptionCostingandVariableCostingCostandManagementAccountingTerminology:EnglishChineseVariableCosting變動(dòng)成本法Absorption/FullCosting吸收/完全成本法ManufacturingCost制造成本DirectLabor直接人工DirectMaterial直接材料ManufacturingOverhead制造費(fèi)用SellingCost銷售費(fèi)用AdministrativeCost管理費(fèi)用CostandManagementAccounting20%點(diǎn)擊輸入標(biāo)題內(nèi)容Recap......DirectMaterials:Rawmaterialsthatbecomeanintegralpartoftheproductandthatcanbeconvenientlytraceddirectlytoit.Example：TyresinstalledinanautomobileCostandManagementAccounting20%點(diǎn)擊輸入標(biāo)題內(nèi)容Recap......DirectLabor:

Thoselaborcostthatcanbeeasilytracedtoindividualunitsofproduct.Example:WagespaidtoautomobileassemblyworkersCostandManagementAccounting20%點(diǎn)擊輸入標(biāo)題內(nèi)容Recap......ManufacturingOverhead:Manufacturingcoststhatcannotbetraceddirectlytospecificunitsproduced.IndirectMaterial:Materialsusedtosupporttheproductionprocess.IndirectLabor:Wagespaidtoemployeeswhoarenotdirectlyinvolvedinproductionwork.

OtherMfg.OHCostandManagementAccountingRecap......Non-manufacturingCost:Non-manufacturingcostsarenecessarytocarryongeneralbusinessoperationsbutarenotpartofthephysicalmanufacturingprocess.SellingCostFinancialCostAdministrativeCostsCostandManagementAccounting20%VariableCosting

WhatisVariableCosting?Amethodofinventorycostinginwhichallvariablemanufacturingcosts(directandindirect)areincludedasinventoriablecosts.

GenerallyusedforinternaldecisionmakingIncomestatementispreparedthecontributionformat(usefulforCVPanalysis)CostandManagementAccountingVariableCosting

CostandManagementAccountingVariableCostingLOREMIPSUMDOLORLoremipsumdolorsitamet,consecteturadipisicingelit.ProductCost

PeriodCostDirectMaterialDirectLaborVariableManufacturingOverheadAdministrativeExpenseSellingExpenseFinancialExpenseFixedManufacturingOverhead20%AbsorptionCostingWhatisAbsorptionCosting?Amethodofinventorycostinginwhichallvariableandfixedmanufacturingcosts

areincludedasinventoriablecosts.GenerallyusedforexternalreportingpurposesIncomestatementpreparedinthetraditionalformat(requiredbyIFRSandGAAP)CostandManagementAccountingAbsorptionCostingCostandManagementAccounting

LOREMIPSUMDOLORLoremipsumdolorsitamet,consecteturadipisicingelit.ManufacturingCost

PeriodCostAbsorptionCostingDirectMaterialDirectLaborVariableManufacturingOverheadFixedManufacturingOverheadAdministrativeExpenseSellingExpenseFinancialExpenseQuickCheckCostandManagementAccountingWhichofthefollowingitembelongstoproductcostundervariablecostingmethod?A.FixedmanufacturingoverheadB.VariablemanufacturingoverheadC.PeriodcostD.SellingcostQuickCheckCostandManagementAccountingByapplyingabsorptioncosting,fixedmanufacturingoverheadisconsideredasperiodcost.A.True

B.FalseSummary:CostandManagementAccounting12AbsorptionCostingisamethodofinventorycostinginwhichallvariableandfixedmanufacturingcostsareincludedasinventoriablecosts.VariableCostingisamethodofinventorycostinginwhichallvariableandfixedmanufacturingcostsareincludedasinventoriablecosts.

Part2:ComparisonbetweenabsorptionandvariablecostingChapter4AbsorptionCostingandVariableCostingCostandManagementAccountingTerminology:EnglishChineseContributionMargin貢獻(xiàn)毛益GrossProfit銷售毛利SalesRevenue銷售收入CostofGoodsSold銷貨成本SalePrice銷售價(jià)格NetOperatiogIncome凈利潤Inventory存貨Expense費(fèi)用CostandManagementAccountingDirectMaterialDirectLaborVariableMfg.OHFixedMfg.OHAdministrativeCostSellingCostFinancialCostProductCostPeriodCostAbsorptionCostingVariableCostingProductCostPeriodCostRecap......CostandManagementAccountingAbsorptionCostingVariableCostingVariableCostingVSAbsorptionCostingUnitProductCostUnitProductCost=DirectMaterial+DirectLabour+VariableMfg.OH+FixedMfg.OH[onunitbasis]UnitProductCost=DirectMaterial+DirectLabour+VariableMfg.OH[onunitbasis]VariableCostingVSAbsorptionCostingSupposetheABCcompanyproducesandsellsasingletypeofproduct,andtheoutputofeachyearis30,000units:201920202021Variablecostperunit:Directmaterial,directlabor,andVariableMfg.OH$20Selling&AdministrativeExpense$5Fixedcostperyear:FixedMfg.OH$150,000Selling&AdministrativeExpenses$100,000CostandManagementAccountingCostandManagementAccountingVariableCostingVSAbsorptionCosting201920202021DirectMaterial,DirectLabor,andVariableMfg.OH$20

$20

$20

UnitProductCost$20$20$20201920202021DirectMaterial,DirectLabor,andVariableMfg.OHFixedMfg.OH($150,000÷30,000)$205$205$205UnitProductCost$25$25$25AbsorptionCostingVariableCostingCostandManagementAccountingAbsorptionCostingVariableCostingVariableCostingVSAbsorptionCostingOperatingIncomeandIncomeStatementContributionMargin=SalesRevenue-TotalVariableCostTotalVariableCost=VariableProductCost+VariableSelling&AdministrativeExpenseNetOperatingIncome=ContributionMargin-TotalFixedCostGrossProfitFromSales=SalesRevenue-CostofGoodsSoldCostofGoodsSold=CostofBeginningInvnetory+CostofGoodsManufacured-CostofEndingInventoryNetOperatingIncome=GrossProfitFromSlaes-selling&AdministrativeExpenseVariableCostingVSAbsorptionCostingSupposetheABCcompanyproducesandsellsasingletypeofproduct:201920202021BeginningInventory05,0005,000NumberofUnitsProduced30,00030,00030,000NumberofUnitsSold25,00030,00035,000UnitSalePrice$40UnitProductCost:AbsorptionCosting$25VariableCosting$20CostandManagementAccounting20%CostandManagementAccountingVariableCostingVSAbsorptionCostingIncomeStatementUnderAbsorptionCosting201920202021salesrevenue$1,000,000$1,200,000$1,400,000LesscostofgoodssoldCostofBeginninginventoryAddCOGM(30000×$25)LessCostofEndingInventory$0750,00012,5000$12,5000

750,000

12,5000$12,5000

750,0000GrossMarginFromSales$375,000$450,000$525,000LessSelling&AdministrativeVariable(salesvolume×unitvar.mfg)Fixed$125,000

100,000$150,000100,000$175,000100,000NetOperatingIncome$150,000$200,000$250,00020%CostandManagementAccounting201920202021salesrevenue$1,000,000$1,200,000$1,400,000Lesstotalvariablecostvariableproductcostvariableselling&administrativeexp.$500,000125,000$600,000150,000$700,000175,000ContributionMargin$375,000$450,000$525,000Lesstotalfixedcost$250,000$250,000$250,000NetOperatingIncome$125,000$200,000$275,000IncomeStatementUnderVariableCostingVariableCostingVSAbsorptionCosting20%CostandManagementAccounting201920202021BeginningInventory05,0005,000NumberofUnitsproduced30,00030,00030,000NumberofUnitsSold25,00030,00035,000NetoperatingIncomeAbsorptionCosting$150,000$200,000$250,000VariableCosting$125,000$200,000$275,000VariableCostingVSAbsorptionCosting(150,000÷30,000)×50,000=150,000-125,00020%CostandManagementAccountingKeyInsightsRelationbetweenproductionandsalesEffectoninventoriesRelationbetweenvariableandabsorptionincomeUnitsProduced=UnitsSoldNochangeininventoriesAbsorption=VariableUnitsProduced>UnitsSoldInventoriesincreaseAbsorption>VariableUnitsProduced<UnitsSoldInventoriesdecreaseAbsorption<VariableVariableCostingVSAbsorptionCostingQuickCheckCostandManagementAccountingWherethefixedoverheadrateinbothopeningandclosinginventoriesisthesame,whichofthefollowingstatementsiscorrect?A.Ifinventoryremainsthesame,absorptioncostingprofitwillbegreaterth