Absorption Costing vs. Variable Costing: A Report

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Absorption Costing Versus Variable Costing 5 bsorption Costing Versus Variable Costing Absorption Method q1 q2 Year Year Period End Mar 31,'12 Jun 30,'12 2012 2011 Production Budget 25,000 50,000 125,000 100,000 Sales 2,500,000 2,500,000 10,000,000 10,000,000 Cost of Goods Sold 1,625,000 1,625,000 6,500,000 6,500,000 Gross Profit 875,000 875,000 3,500,000 3,500,000 Selling & Admin Exp 500,000 500,000 2,000,000 2,000,000 Net Income 375,000 375,000 1,500,000 1,500,000 Cost of Goods Sold Beg Inventory 650,000 650,000 650,000 650,000 Product Cost 1,625,000 3,250,000 8,125,000 6,500,000 Total 2,275,000 3,900,000 8,775,000 7,150,000 End Inventory 650,000 2,275,000 2,275,000 650,000 Cost of Goods Sold 1,625,000 1,625,000 6,500,000 6,500,000 Prod cost per unit 65 65 Variable Method q1 q2 Year Year Period End Mar 31, '12 Jun 30, '12 2012 2011 Production Budget 25,000 50,000 125,000 100,000 Sales 2,500,000 2,500,000 10,000,000 10,000,000 Var Cost of Goods Sold 1,125,000 625,000 2,375,000 2,875,000 Var Sell & Admin Exp 500,000 500,000 2,000,000 2,000,000 Contribution Margin 875,000 1,375,000 5,625,000 5,125,000 Fixed Costs 500,000 500,000 2,000,000 2,000,000 Net Income 375,000 875,000 3,625,000 3,125,000 Var Cost of Goods Sold Beg Inventory 650,000 650,000 650,000 650,000 Var Mfg Costs 1,125,000 2,250,000 4,000,000 4,500,000 Goods Available 1,775,000
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